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Change We Can Bank On

Posted on Nov 18, 2008
Thomson, Paulson and Rubin
AP photo / J. Scott Applewhite

Treasury Secretary Henry Paulson, center, addresses a gathering of corporate CEOs at an economic conference sponsored by The Wall Street Journal in Washington, D.C., on Monday. With him is Robert Thomson, left, editor in chief of Dow Jones & Co., and former Treasury Secretary Robert Rubin.

This is not change we can believe in. Not if Robert Rubin or his protégé, Lawrence Summers, get to call the shots on the economy in President-elect Barack Obama’s incoming administration. Both Clinton-era treasury secretaries deserve a great deal of the blame for the radical deregulation of the financial industry that has derailed the world economy. They both should, along with former Federal Reserve chief Alan Greenspan, perform rites of contrition and be kept at a safe distance from the leadership of our nation.

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Yet Rubin and Summers are highly visible in the Obama transition team, with Summers widely touted as Obama’s pick for secretary of the treasury. New York Federal Reserve President Timothy Geithner, who also worked in the Treasury Department under Rubin and Summers, is the other leading candidate. But it was Summers who most vehemently pushed for congressional passage of that drastic deregulation measure, the Financial Services Modernization Act, which eliminated the New Deal barriers against mergers of commercial and investment banks as well as insurance companies and stockbrokers. Standing at his side as President Bill Clinton signed the legislation, Summers heralded it as “a major step forward to the 21st century”—and what a wonderful century it’s proving to be.

It was also Summers who worked in cahoots with Enron and banking lobbyists, and who backed Republican Sen. Phil Gramm’s Commodity Futures Modernization Act, which banned any effective government regulation of the newly unleashed derivatives market. The result was not only a temporary boon to Enron, which soon collapsed under its unbridled greed, but also to the entire Wall Street financial community.

The only opposition from within the Clinton administration came from Brooksley E. Born who, as head of the Commodity Futures Trading Commission, dared defy Summers and Rubin, as well as Greenspan. In frequent appearances before Congress, she warned that the burgeoning derivatives trading “threatens our economy without any federal agency knowing about it.” In reward for her prescience, Born, a highly regarded legal expert on derivatives, was treated to scornful attacks from the old boys’ network, led (again) by Rubin, Greenspan and Summers, who questioned her competency and insisted it was she who threatened the stability of the market.

That sexism, as well as stupidity and greed, might have played a role in the dismissal of Born’s concerns has been raised by some of Summers’ critics, who were still smarting even after his subsequent forced departure from Harvard University after disparaging women’s innate ability to grasp mathematics and science. “It was Larry Summers who called her up and screamed at her,” Amy Siskind, co-founder of the New Agenda, a women’s rights group that grew out of the Hillary Rodham Clinton presidential campaign, told the Boston Globe to support her view that Summers is a “known misogynist.”


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Whatever the motives, Born was painfully right in her warnings and Summers was totally wrong in overseeing the passage of legislation that summarily prevented any government regulation of the debt instruments that have proved so disastrous. I don’t know if Born, now retired at 68, would be interested in the treasury secretary position, but she is certainly far more qualified than the other candidates under consideration.

Barring that possibility, why not go with Sheila Bair, the chair of the Federal Deposit Insurance Corporation, who has distinguished herself by proposing a sterling alternative example of how to deal with the banking collapse? It is Bair who has most forcefully advanced the goal, advocated by Obama in his recent “60 Minutes” interview, of putting homeowners before banks. Under her leadership, the FDIC has made sure that the insured banks, which it supervises and occasionally takes over, act to prevent foreclosures rather than using government handouts to finance new bank mergers.

On Tuesday, House Democrats led by Rep. Barney Frank, D-Mass, accused Treasury Secretary Henry Paulson of betraying congressional language authorizing the $700 billion bailout that specifically called for “mortgage foreclosure diminution.” Rep. Carolyn Maloney, D-N.Y., charged, “We’re basically funding mergers and acquisitions, not lending.” On Friday, Bair introduced a proposal to allocate $24.4 billion of the bailout specifically to modify loans to prevent 1.5 million foreclosures, but was opposed by Paulson.

Because Geithner and Summers support Paulson’s approach, Obama should reject them and pick Bair to give us the kind of change he’s been promising.

Robert Scheer is the author of a new book, “The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America.”

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By Maani, November 30, 2008 at 11:27 am Link to this comment


“Maani, Inherit—I can only hope that all my adversaries are as mindless as you guys.  It’s guys like you that should be put in as heads of the Dems and Aipac.”

And I hope there are VERY FEW like you, and that they are not, and will never be, in any positions higher than dog-catcher.  LOL.


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By Folktruther, November 29, 2008 at 9:59 pm Link to this comment

Maani, Inherit— I can only hope that all my adversaries are as mindless as you guys.  It’s guys like you that should be put in as heads of the Dems and Aipac.

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By Maani, November 29, 2008 at 10:46 am Link to this comment


LOL.  I guess I’m just slow on the uptake…LOL.


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By Inherit The Wind, November 29, 2008 at 9:09 am Link to this comment

Maani, November 24 at 12:53 pm #


Apparently, anyone who is not as “left” as you is a “right-winger,” no matter who they are, what they believe, what they have done for left-wing causes, or any other factor.

You are hopeless.



Figured it out, didja?  Folk likes to ignore inconvenient facts that upset his bizarro world view.  He knows the “truth” and doesn’t need facts.  He is no different than one of those nutty Christo-fascists who think they don’t need facts or evidence because God is speaking directly in their ear.  But in Folk’s case it’s Marx, Che, Qutb (founder of Modern Wahabism, jailed by Nasser).

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By John Papola, November 24, 2008 at 8:57 pm Link to this comment

Let me amend my platform.  Forget 100% reserve requirements.  Let’s consider private currency.  wink  Cheers.

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By Maani, November 24, 2008 at 1:53 pm Link to this comment


Apparently, anyone who is not as “left” as you is a “right-winger,” no matter who they are, what they believe, what they have done for left-wing causes, or any other factor.

You are hopeless.


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By TAO Walker, November 24, 2008 at 1:45 pm Link to this comment

Well, here’s “the good news.”  This “global” horror movie is nearing THE END of its final reel….and underneath it all, Sisters and Brothers, it IS all absolutely nothing but make-believe. 

Almost before you know it, all the domesticated peoples will be fleeing the burning theater they’ve been mistaking for the actual Song ‘n’ Dance ground of Life Herownself.  Sure, many will be in terrible shock when they find their selfs back in the organic Living Arrangement of our Mother Earth.  They’ll get over it….sooner or later.  Take it from your old Indian Guide….and certified EMT.

Of course, there’s still a little time to exit the bowels of this “....heart-attack machine” ahead of the panicky mob.  Avoid the rush….not to mention the CRUSH.

Be seein’ y’all soon.


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By Folktruther, November 24, 2008 at 12:59 pm Link to this comment

Yes, you are a right winger, Maani, a Zionist right winger that supports the Dems rather than the Gops.  John is a right wing libertarian who believes there should be even LESS government regulation of the banks and corporations, precisely the neoliberal position that got the US in its present economic condition. 

The War on Terrorism, neoliberalism and a American police state are driven by Zionism funded by Jewish and Chistian businessmen, and expounded by Jewish and Christian academics, professionals, and bureaucrats.  Obama is in favor of both and has appointed Zionists to key positions to contunue the War, neoliberalism, and, necessary to support both, a postmodern police state.

Obiden’s success in the US has affected the election in Israel where Netanyahu and the Likud party now enjoy a commanding lead.  Both Obiden and Likud are against a Palestinian state, this being one of the implicit policies of the Zionist instigated War on Terrorism.

Therefore the Zionist War, neoliberalissm and police state will continue in both Israel and the US, and the policy of ethinic cleansing of the Palestinians- under the codeword of Transfer-  will continue to grow in the Israeli population. 

Unless the American population distinguishes between anti-Semitism and anti-Zionism and opposes the latter, it cannot oppose effectively the War, neoliberalism, or a police state.  The alternative is to believe in the sucker Hope and delusive Change that Obama promises, which appears to be fine with you and other right wing Dems, as class inequality continues to increase and the American population is deprived of their jobs, homes, and even food in the comming years.

This is the change that we can believe in.

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By Maani, November 24, 2008 at 9:25 am Link to this comment


Well said.  And I am no “right-winger” (LOL).

I would simply have asked Folktruther: So, is the answer to simply throw the Constitution in the fire and start over?  Shall we try anarchy?  or maybe go back to monarchy, or a benevolent dictatorship?

As I noted before, Folktruther is about as much “folk” and “truth” as FOX news is “fair” and “balanced.”  LOL.


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By Folktruther, November 24, 2008 at 9:07 am Link to this comment

The arguments of right wingers like yourself never change, John; it’s always go back where you came from.  My comment that the US neoliberalism-which you advocate- can’t compete with Chinese party capitalism in growth, an obvious truth, elicits the comment to consider Chinese citizenship. If the choice is between Patriotism and the simple reality-based truth, you, like many Americans, prefer the Patriotic truth.

The American truth, indeed any truth consensus based on a national and regional perspective, conflicts sharply with the truth formulated from world historical perspective.  It is this holistic truth that is the basis for mobilizing the American people, indeed all people, to subvert the power delusions created by civic Patriotic Education.

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By Back bencher, November 24, 2008 at 8:17 am Link to this comment
(Unregistered commenter)

By John Papola, November 23 at 3:40 pm #


“With all due respect, I’m not hearing any ideas in your post.  I’ve heavily criticized the corporatist collusive powers and the central bank collusion in this post.  Monetary inflation certainly is a robbing from the average people to give to the politically connected.  It is my belief based on everything I’ve read and observe that the best alternative is a dramatically smaller state.”

Actually I agree with some if not most of what you have posted, my difference with you is in the fine-tuning of capitalism.  I believe in labor ownership. This puts the majority of company profits with the majority of workers, in Communist countries it was called a “collective” HOWEVER, big governments corrupted Communism and socialism just as big governments have corrupted capitalism.

You say you are a guy working for a living, Say for an instance you work for XYZ company 8 hours a day five days with four standard overtime hours on Saturday. Say my father dies and leaves me 40,shares of XYZ which gives me controlling ownership. Say because I’m a greedy bastard who never worked a day in my life, I want more profit from the company than I have now. Say I talk to the Walton Family, (who sells XYZ at Walmart) and they teach me how easy it is to incorporate XYZ in the Caymans, and move all production to mainline China. Now my stock is worth twice it’s former value, I’ve busted the XYZ union as I no longer need Union workers, and I pay no US taxes, because of my off-shore status….

Is this Jake with you?

XYZ was a US Company, they still use the name that people trusted when the Company was located in South Bend Indiana, and no one but the laid off workers, and the decimated town of origion know that XYZ is now a totally different company with a compleatly different grade of products.

Capitalism NEEDS regulation, and while (like you I assume) do not trust the government to regulate the system, I do trust the workers.

Unions were a great Idea and without the corruption could be viable again, The “any man a king” motivation is hard to deny, BUT unregulated capitalism is a race to the bottom for all involved inferior products made by incompetant workers, and dangerous conditions created by a wealth for owners mentality which benefits no one save those on top.

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By John Papola, November 24, 2008 at 5:41 am Link to this comment

Oh Folk,

“It is legalistic and ideological dreck that obscures real power relations.”

We are a republic and the health of our system is dependent on rule of law.  The fact that most people don’t realize that the Congress is the branch empowered to declare was is probably the reason our current corrupt leaders can get away with ignoring the law.

I bet most people think our currency is still backed by gold in some way.  Rather than condemning civic knowledge itself, we should be working to make it relevant again.

As for your love affair with China’s party capitalism, I think you should give Chinese citizenship a try.  See how the party would respond to you posting descent on the internet.

I think I’m done here.  You aren’t willing to have a real back and forth, ask questions and then ignore the answers.  I don’t see any more constructive debate to be had. 

Have a great Thanksgiving and God Bless.

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By Folktruther, November 24, 2008 at 12:52 am Link to this comment

Civic knowledge, Maani, is largely Educated garbage.  It is legalistic and ideological dreck that obscures real power relations.

The 40% of the people who responded ‘incorrectly’ that the preseident has the power to declare war were, in fact, quite right.  No matter what the Constitution says. Congress does what it is told in war situtions, as in so much else.

The Constitution is an ideological document to teach children in school power delusions; the powerful ignore it when they want to.

The 13th, 14th and 15th Amendments gave African-Americans civil rights in ideology,  while they were segragated, enslaved and lynched with impunity in practice for a century.

Free market economics, Neo-americanism, is much worse economically than the party dominated economic system of China.  Governemnts have historically played an increasing role in economies.

Schoolbook civics, social theory and history are a large part of the reason why the American people are so ideologically backward and deluded about power relations.

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By John Papola, November 23, 2008 at 10:05 pm Link to this comment

That’s a cool little civics test.  Not to brag or nothing, but I scored an 85%.  How sad that a B constitute the top 3%.  Oh, America.  What’s happened to your knowledge?

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By Maani, November 23, 2008 at 8:54 pm Link to this comment


This is somewhat alarming (or perhaps, for some, not even surprising:


Thu Nov 20, 2:24 pm ET

WASHINGTON (AFP) – US elected officials scored abysmally on a test measuring their civic knowledge, with an average grade of just 44 percent, the group that organized the exam said Thursday.  Ordinary citizens did not fare much better, scoring just 49 percent correct on the 33 exam questions compiled by the Intercollegiate Studies Institute (ISI).

“It is disturbing enough that the general public failed ISI’s civic literacy test, but when you consider the even more dismal scores of elected officials, you have to be concerned,” said Josiah Bunting, chairman of the National Civic Literacy Board at ISI.

“How can political leaders make informed decisions if they don’t understand the American experience?” he added.

The exam questions covered American history, the workings of the US government and economics.  Among the questions asked of some 2,500 people who were randomly selected to take the test, including “self-identified elected officials,” was one which asked respondents to “name two countries that were our enemies during World War II.”  Sixty-nine percent of respondents correctly identified Germany and Japan. Among the incorrect answers were Britain, China, Russia, Canada, Mexico and Spain.  Forty percent of respondents, meanwhile, incorrectly believed that the US president has the power to declare war, while 54 percent correctly answered that that power rests with Congress.

Asked about the electoral college, 20 percent of elected officials incorrectly said it was established to “supervise the first televised presidential debates.”  In fact, the system of choosing the US president via an indirect electoral college vote dates back some 220 years, to the US Constitution.

The question that received the fewest correct responses, just 16 percent, tested respondents’ basic understanding of economic principles, asking why “free markets typically secure more economic prosperity than government’s centralized planning?”
Activities that dull Americans’ civic knowledge include talking on the phone and watching movies or television—even news shows and documentaries, ISI said.

Meanwhile, civic knowledge is enhanced by discussing public affairs, taking part in civic activities and reading about current events and history, the group said.

Here is the test.  See how well YOU do:

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By John Papola, November 23, 2008 at 8:15 pm Link to this comment


Here’s where I stand (as of right now):

Yes, I am in favor of dramatically less regulation pretty much across the board. The reason is NOT because I think big business should be allowed to run free.  Quite the opposite.  I believe that most regulations are either captured by or often proposed and lobbied for by big corporate incumbents or other powerful interest groups.  I believe most regulations are used to prevent competition that would push down profit margins and lift up wages through labor competition.

We can get into some real specifics if you like, but there are just endless examples. 

But more importantly, I’m in favor the absolute end of all corporate and business subsidy.  Bye bye farm aid.  So long oil subsidies.  Ethanol?  Forget it.  Wind and solar?  I’ll buy it when it’s viable.  I’m a very green person and a vegetarian.  But I want the best tech to win, not the one picked in advance by central planners in cahoots with wealthy profiteers.  Chances are that the oil replacement we want hasn’t been invented yet.  Subsidizing the current alternatives only reduces the change that there will be investment in the unknown future ideas.

I’m also in favor of a return to the gold standard, the abandoning of the federal reserve and open to 100% reserve requirements (or possibly private currency).  This would end the government’s ability to wage wars “off the books”  funded by the inflationary printing press.  It would eliminate inflation and actually bring about slow and steady deflation that would reward work and savings.

It would also end the banks ability to gamble with money they can’t afford to lose (which is what brought us here).  Government should live within it’s means.  If it needs to borrow, that borrowing should be subject to the same kind of scrutiny that any other investor makes, namely the proof of future production that will allow for the loan to be paid back with interest.

I’d like to see the end of undeclared wars of foreign aggression and intervention and the removal and return of most of our military from around the world.  Team America World Police must end.  It’s also costing us trillions.

I’m pretty sympathetic to the legalization of all drugs and the end of the “war on drugs” because I find it futile and broadly racist in effect.  The police state enabled by this war destroys our cities and fills our prisons with abusers for no reason.  Also, the American black market demand for drugs funds cartels all around the world from Mexico to Columbia to Haiti to Afghanistan that are hideously destructive to their people.  I believe we could spend a tenth of the money we spend on this ludicrous and futile “war on drugs” by making them legal, regulated and investing in the savings and proceeds on treatment and prevention.

With all the savings from the above, I would like to see a massive reduction in taxes to the point where there is no real tax code or IRS, both of which are epic drags on our small businesses and economy through their byzantine rules.  Our business taxes should be low enough to incentivize businesses coming here… say 10 tp 15%.  I’d love to see no personal income tax at all.

Notice I said nothing about eliminating Welfare, Medicare, Social Security or Public Education.  It’s not that I think these are working well (they’re not).  But the above I think are our first priorities.

That’s it for now.  That’s my liberty platform.  I think it’s quite populist and very much against the current “power system”.  Take it of leave it.

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By blog dog, November 23, 2008 at 8:14 pm Link to this comment
(Unregistered commenter)

RE: ”...making the dreams of Neoconservative and their Project for the New American Century come true by making sure that their radical agenda is adopted and enforced by Bush/Cheney administration in its true letter and spirit. Global war on terror is one such enabling tool in use toward its execution.”

A little behind the times - that was the program - now scrapped because it failed so miserably - Brzezinski’s program is now in ascension - moving the focus away from the Middle East - the new target is Russia - the Bush/Cheney faction has been effectively “out of power” for a bout a year - the Barksdale Nuke mutiny ending its final grasping effort to launch on Iran.

Don’t expect the Global War Of Terror to go away - Terror will continue to be used to provoke geopolitical chaos - but within a couple years Middle East wars will most likely all be fought by proxy.

BTW - Bush was never a hero, only a useful fool - same with Obama, already being run, as was Carter by Trilateralist operative Brzezinski, whose former office boy, Gates, will certainly stay on at the Pentagon - some improvisation may be needed, but it’s pretty well scripted - when they’ve gotten as much mileage out of Obama as they can, another useful fool will be brought forward to capture the popular imagination and the agenda will continue to advance - BAU for the NWO.

PS: In response to the reference to Friedman/Chicago School of economics as a comprehensible rejection of suspicions that global finance cabals are the architects of global financial shock doctrine by suggesting that the models are fine, there’s no malfeasance and everyone just messed up is incredibly naive.

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By Folktruther, November 23, 2008 at 6:09 pm Link to this comment

John, you are in favor of less regulation of corporations by the Government?  Less people expenditures, health, welfare Education?

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By A Khokar, November 23, 2008 at 5:51 pm Link to this comment

@Folktruther, November 22 at 11:50 am

We may not be sure whether we will be able to find some amphibious animal on the mars or not but I certainly know for sure that there is a hero who is making the dreams of Neoconservative and their Project for the New American Century come true by making sure that their radical agenda is adopted and enforced by Bush/Cheney administration in its true letter and spirit. Global war on terror is one such enabling tool in use toward its execution.

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By John Papola, November 23, 2008 at 4:40 pm Link to this comment


With all due respect, I’m not hearing any ideas in your post.  I’ve heavily criticized the corporatist collusive powers and the central bank collusion in this post.  Monetary inflation certainly is a robbing from the average people to give to the politically connected.  It is my belief based on everything I’ve read and observe that the best alternative is a dramatically smaller state.  The state is a supporter and creator of corporate monsters, not the opposite.  I think I’ve argued this point here at some length with little real rebuttal.

You bring up Domino Sugar without any irony about the role of government sugar quotas in their power maintenance.  That these ludicrous quotas are still in place is pretty shocking proof of the lack of accountability in the state.  We could go on and on with legions of other examples.  Capitalism is not a system of design so referring to it as such misunderstands its very nature.  It is fundamentally a system of emergence and spontaneous order based on a few simple rules, a key of which is property rights.

Now, corporatism and crony capitalism is another matter.  Again, this is why I believe in a smaller state and decentralized power.  A constitutional government.  Our history of abuse by power is the history of tyranny and statism.  Big corporations hate free markets because they drive profits down and wages up. 

All of you seeming to argue against economic liberty don’t seem to really be arguing in favor of anything. Do you want some kind of socialist state?  Something else?  I’d love to hear the affirmative ideas.  And if they’re socialist, I’d love to hear the means through which that kind of system can avoid it’s long history of tyranny, innovation suppression and collusive oligarchy.  So far, the only place socialism seems to have a shot at working is in heaven.  But I’m open to a reasonable argument.

BTW, I’m a middle-class guy working for a living and right now just trying to get by paying the bills and taking care of my family.  Nobody is helping me out.  I’m on my own.

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By Back bencher, November 23, 2008 at 3:54 pm Link to this comment
(Unregistered commenter)

By John Papola, November 23 at 9:10 am #

“Please, for everyone stuck in this utter unempirical notion that the rich of the world are systematically becoming so by taking from the poor, do some real economics study.”

Been there done that:

The problem with taking capitalist based writings as a defense of capitalism is there is an extreme conflict of interest.  The Universities, the students, the press, and the government are all part of a system which has been designed (by some very brilliant men) t shield itself from criticism functions well enough to keep the majority in the pews, BUT

the argument for an infinite amount of wealth generated on infinitem is a false premise.

Any economist worth his salt will tell you that all wealth is dependent not so much on ideas as on the control of resources. being that (up till now) we have only the resources of one small planet to be divided between 6.5 Billion people, wealth is not infinite. In other words as some religoius zealots claim “The poor will always be with us” not because of their lack of initiative, but due to some Andrew Carnigie, or hunt brothers hording wealth they will never use, or by their directing it away from areas where poor folks will be forced to remain.

Domino Sugar, United Fruit, USX, and many many others have made their corporate owners rich on the backs of labor which is never rewarded at its true value.  I don’t need a study to tell me that, I work for a living.

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By John Papola, November 23, 2008 at 3:47 pm Link to this comment


I’m not going to claim enough knowledge of China to really dig into some kind of cause-and-effect analysis.  I generally reject causal arguments because I don’t believe the world is simply or that the information necessary to be anywhere close to right is accessible.  I must also stipulate that I’m not much of a fan of macro indicators like GDP in the absence of micro knowledge.  They just mask too much of what actually matters in economics (which is the incentive structures in play for individuals).

I will say that there was a decisive change between China’s old agrarian socialist economic model and their embrace of trade and markets at certain levels.  It seems reasonable to attribute their growth to that embrace.  Also, their astonishing growth rate is based in no small part on the fact that they’re building from a dramatically smaller economic base. That is just basic math.  It’s easier to grow from a smaller base, barring other barriers.  The other factor that China benefits from enormously is their ability to get a running start by importing all the innovations that have taken place in market economies.  Think about it.  China didn’t do anything to bring about the computer or the internet, but they are now developing with those benefits in place.

Take all of that and countless elements I’m completely ignorant of and mix them in with a society of hard working people who are just now getting a taste of market incentives to invest and prosper, and it’s not that hard to see how 10% growth rates are achievable.

I see no contradiction at all between China’s growth and the ideas of liberty.  I think the hopes that market forces will lead to civil liberties is overblown, however.  At some point, China will burn through the low-hanging economic fruit of basic capital development and be forced to confront the innovators dilemma.

As a side note, I believe that there are many elements of China’s economy that are dramatically more free than the US.  If you wanted to start a business braiding hair in China, I don’t think that you’d need a license (like you do in the US, which is simply ludicrous).  I bet there is tremendous degrees of emergent economic behavior of the bottom-up variety that faces far few barriers to entry than business start-ups face in the US.

...but what the hell do I know about China?  Seriously.  And what do you really know?

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By Folktruther, November 23, 2008 at 3:25 pm Link to this comment

John, the Chinese economy has grouwn over the last half century at a rate of about 10% a year, an unprecidented historical development.  It invests over 40% of its GDP every year, which is also unprecidented.

The govenment owns about a third of the economy and the biggest banks.  They are subject to a hierarchal communist party which includes technically trained people.  In my opinion they play their political cards extremely cleverly.  They are trying to keep a low profile until their economic dominance is such that they cannnot be militarily attacked.

This is not a Free economy, which exists only in liberal and libertarian textbooks.  Only managed economies exist; in the US the banks control the government, in China the party contols the banks.  The US can’t compete with the Chinese economy which is, in total GDP, about equal, although of course much less per capita.

What is your libertarian analysis of this historical conflict?

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By John Papola, November 23, 2008 at 2:40 pm Link to this comment

“John, you appear quite sincere in defending the rich.”

I am sincere, but if you think I am defending the rich, you fundamentally don’t understand what I’m saying.  I strongly defend the rights of individuals to pursue wealth.  That is true.  And I don’t find relative inequality to be a problem so long as everyone is moving up the ladder.  But my views are no comfort to the incumbents of power.

What I’m saying is that powerful central authority is the tool of the existing powers and they all use it to keep out new comers.  Surely you can agree with this as it is a fact that dates back to the powerful railroad tycoons using the Interstate Commerce Act as a weapon to keep out competitors and maintain higher prices, which of course hurt the people.  Even Ralph Nader found this to be true in his study of regulation and competition during the 1970s (google “Monopoly Makers”).

Again, big business and rich incumbents are no friend to REAL libertarian ideas.  Real competition from remotely free markets is a threat to the “Power System”.  Again, this is why the more socialized a nation’s economy is, the fewer large corporate bankruptcies there are.  This is why our current bailouts are so terrifying to me, because they are rewarding failure and perverting the incentives.  This is why our foreign interventions, including aid, are so often a tool for propping up despots.

I believe that you and I, libertarians and progressives, can share common ground in our fight against the abuse of power through corporatism.  But for that to happen, progressives must be honest about what our system is and is not.  It is not a pure “free market”.  This crisis is not a market failure as Bob is trying endlessly to promote.  This is a failure of corporatist collusion between the central bank, the government and the power players close to those entities.

But so long as progressives erect the “free market” strawman and libertarians appear to hold water for the big corporations, we’ll never make progress or see real change.  I’ve never read Ayn Rand.  I don’t “celebrate” selfishness. But I do acknowledge the power of incentives that drive people invent and produce.  Wishing for these incentives to change is the true delusion of socialism.  Again, it’s not workable model.  It’s a religion.

The system that enables a healthy, bottom-up emergence of innovation has and will deliver the growth and prosperity that we’re all looking to see.  America has historically been the worst place to be a corporate incumbent thanks to our embrace of creative destruction.  That is what we’re risking in our current action.  A system that concentrates power in the State deprives people of prosperity through corruption, stifling of innovation and ultimately through outright theft via taxation and inflation. 

I see no better example than our wealth (and likely energy) destruction known as ethanol mandates and subsidies.  This is classic central planning failure that a market would never support.  And yet, despite it being a known disaster, these systems remain in place and rob from the working class through higher food and fuel prices to give to the politically connected agribusinesses like Monsanto.  The coming boom in federal “investment” in alternative energy will likely be equally destructive to the working class while lining the pockets of connected corporatists like T. Boone Pickens.

If you put your faith in The State to be an agent of the people beyond the simple powers granted in our constitution, your faith is betting against all known history.

Please, feel free to dive into a deep rebuttal.  I like learning from people of opposing views.  But I think we’re closer than you think.

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By Folktruther, November 23, 2008 at 11:43 am Link to this comment

John, you appear quite sincere in defending the rich. Some of us feel that money is a power commonity as well as a unit of exchange and those who control the means of production increase their power as well as their wealth. That although the ruling class competes with each other, they unite against the working population.

A power system includes the privately owned mass media as well as the government.  They both support the power interests of the power struture.  Does this assertion not have empirical implications, or is it just another conspiracy theory of the crazed brains of the leftists.

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By John Papola, November 23, 2008 at 10:10 am Link to this comment

Please, for everyone stuck in this utter unempirical notion that the rich of the world are systematically becoming so by taking from the poor, do some real economics study.

Here’s a great place to start:

Here’s another excellent piece of work from the Minneapolis Fed by Lucas:

All this talk of “Power systems” and nefarious conspiracy is just completely lacking broad empirical support.  Is there exploitation?  Of course.  Are there incentives for the powerful to manipulate the state to maintain their power?  Obviously.

Nobody is a more fierce opponent of free markets than big business.  That is something “progressives” seem unable or unwilling to grasp.  I guess it’s a lack basic economic understand or broad knowledge of the role of regulation throughout history.  I think it’s a quasi-religious attachment to this public romance about the State as the agent of “the public”.  It is not.  The public is the agency of the public.  The state has a few clear roles for which it is well suited and tremendous list of roles for which it clearly fails.

We can be high minded and philosophical, or pragmatic and specific.  Either way you slice it, the state comes out systematically in favor of the power elite or the interest groups.  That will only be reduced by limiting their power to print money and divert resources to their constituents through regulation and subsidy.

If anyone thinks that this is nonesense, please explain why we still have sugar quotas, or ethanol subsidies.

Socialism may work in heaven, where resources are infinite.  On earth, it is a clear and obvious failure in the long term.

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By Alan, November 22, 2008 at 11:37 pm Link to this comment
(Unregistered commenter)

>Mr. President, can you detail your economic plan?
>> We have ta recognize the gravity of our situation
and go forward with a bold and well considered plan.
Clean Coal and no hasty tax adjustments, that’s
our plan, well a major modicum of it.
>Mr. President, you share the prominent “ta” with
George Dubyah Bush, how do you account for that?
>>Ask Molly Ivens.
>She’s dead, sir.
>>I know that, the question was rhetorical.

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By Bill473, November 22, 2008 at 7:11 pm Link to this comment

The little girl said “I’m drawing a picture of God.”

The teacher said, “But no one knows what God looks like.”

The little girl said, “They will in a minute.”

We are educating people out of their creativity,” Sir Ken Robinson’s most amusing video filmed in front of an audience, about how education is hurting us. It is so true, and really entertaining - (left column second down)

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By Sean Maurice Hunt, November 22, 2008 at 3:15 pm Link to this comment
(Unregistered commenter)

A Pyramid scheme built on a house of cards…hmmm very interesting and very creative.  These guys never have enough money or do enough damage…what is it that causes the insatiable void that they try to fill?  Did they do it to help poor people to buy houses? I dont think that was it.  I think they did it for that greedy little devil inside them…the name of that little demon is abaddon.  Its in the old testament interesting numerology Revelations 9.11 ... Anyway i digress…the point is we are all controlled by unseen powers that hide in the dark to avoid being exposed to the light.  ARe Ruben, Summers, Greenspan, Bush, Hitler, Napolean, Saddam, controlled by a destructive spirit?  Or is there something innate in human beings that needs to destroy as much as we create.

I think John Lennon said it best “we all have Jesus inside us and we all have hitler inside us.”  Its up to us to find the appropriate spirit with which we approach the world.

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By TAO Walker, November 22, 2008 at 3:14 pm Link to this comment

The “working assumption” of Robert Scheer and many of those commenting here seems to be that the current “economic crisis” is largely the “product” of mal- and mis-feasance on the part of some self-styled “supermen.”  So if the financial apparatus can somehow be got back into the “hands” of people a little less selfish and incompetent, the thinking so wishfully goes, “....the global economy can get back on-track and moving forward again.”

This desperate belief compels its adherents to studiously ignore, of course, the plain fact that “the fundamentals of the economy” are actually quite rotten-to-the-core.  Based on the terminally idiotic notion that our Mother Earth (and all Her other Children) are just “property,” the driving conceit of the “civilized” peoples is their supposedly “divine right” to inflict on everyone and everything else whatever is required to maximize their own private “comfort” and “convenience”....and that’s not even to mention their fatal obsession with the devastating delusion they call “power.”

Meantime, from here in the actual Living Arrangement it’s clear that the “perfect storm” breaking over the superficiality that is “modern civilization”  has itself been generated entirely by the habits and presumptions of the very “individuals” upon whose heads it is falling.  That’s something you truly CAN take-to-the-bank, Sisters and Brothers.

You might still take shelter in the Tiyoshpaye Way within the Living Arrangement of our Mother Earth within the Song ‘n’ Dance of Life Herownself.  Just keep in-mind your money’s no-good here.


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By Folktruther, November 22, 2008 at 12:50 pm Link to this comment

A Khokar-Your comments-that based on his acheivements Bush is a hero of America-or that the US controls Central Asia- indicate that you are communicating from Mars.  I’ve always wondered, are there any animals of any kind in the water there?  Inquiring minds want to know.

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By A Khokar, November 22, 2008 at 2:32 am Link to this comment

In US Presidential elections Mr Barack Obama got a splendid slide victory not on the bases of giving out his new foreign policies or the miasma of Iraq war or for that matter his purported resolve toward war on terror. The results show that 67% people voted him for his given promise to change and bring about the socio economic reforms that people were fed up with the out going Bush administration who are leaving them and their country in such a mess. Votes counted toward foreign policy or the War against terror are about 7% each only.

This is an era of people having the controls on the energy resources and people with ability to innovate. America has got the both. One may curse George W Bush to any extent; that mad man was a tyrant; a criminal and oppressor. But he was tyrant, criminal or oppressor for whom? Not for American. He proved to be oppressor of the oppressors, where he flexed his muscles to expand the American hegemony; primarily in the lands with economic resources and other control points and venues. Those people may say they have been subjugated and victimised by George W Bush. But basing on the achievements for American he is the hero for his nation.

However he and his party; conservatives in any case have not been rejected by American masses in this elections for their foreign policy or the war against terrorism. The American masses they very well know that Iraq war or the war against terrorism are just the phoney wars; basing on lies and deception. This war called as Global war against terrorism is just an enabling tool to push forward the U.S planned hegemony in the light of neoconservative Project for the New American Century, whose radical agenda was adopted by the Bush/Cheney administration. The subject project is American national project which has the due support of Barack Obama and the Democrats. Goals of this policy and achievements there of, are as sacred for Democrats, as are for Conservatives.

So; we may see a change or say reforms in the American socio-economic fields with in the country but there may not be any change in the policy of the set American national goals in the field of foreign policy where huge achievements of George W Bush are being relished and haled truly and duly. The entire Middle East and central Asia are practically in U.S. fold; it is meeting both aforesaid ends of U.S. ‘control of economic resources’ as well as ‘Innovation ability’; and the king makers and proxy countries found in the area of U.S. operations like; Pakistan are ready to serve her majesty U.S…. so willingly….for few more Dimes.

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By alterid, November 21, 2008 at 8:37 pm Link to this comment
(Unregistered commenter)

Apropos the most complained about assortment of Mr. Obama’s choices
so far for various slots in his administration, I submit the following:

Over several decades, I have seen many truly excellent teachers genuinely
assist in the maturing process of numerous troubled, undisciplined, willful,
and often, troublingly powerful, students by choosing them to fill positions
of leadership, tutoring, guidance, responsibility, or some other form of service to the class as a whole, as well as by casting them incarefully chosen parts in class plays…..

Good teachers are way better than gold….
and all are human beings deserving of our help…

just some ‘hopeful’ thoughts and considerations…

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By mud, November 21, 2008 at 12:57 pm Link to this comment

George Bush style deregulation and “oversight” is a wee bit out of hand when the FBI is tasked with investigation minnows while purposely ignores the sharks.

Former Regulator: Clear Fraud in Financial Crisis—Why Isn’t Anyone in Jail?

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By John Papola, November 21, 2008 at 12:44 pm Link to this comment


We’ll just have to agree to disagree.  Central planning doesn’t strip away inequality.  Pushing down on the top of the curve does not lift up the bottom systemically.  It simply puts the incentives for people not to create or produce, but to cozy up to the political elite and the central authority for handouts.  There is a dramatic and extensive history of corporations capturing the efforts of the state to regulate and redistribute from the railroads to the telcos.

You seem to be wishing for a benevolent ruling class where the central planners have all the power to pick winners and losers in the economy, yet are somehow not corrupted by this power and captured by the interests whom they affect.

I reject that wish for utopian leaders and believe in the fundamental decentralization of power and choice.  I believe that you are conflating corporatism with free market competition.  What’s worse, I think that you reject the idea of a free market as utopian, while adhering to an alternative and, in my opinion, more dangerous utopian ideal of perfect central leadership.

Take some time to read up on the Trans-santiego Chilean public transit history for a truly amazing example of how central planning hurt everyone, especially the poor, while aiming to reduce “inequality”.

The rich don’t go away in socialist countries… they just get cozy to the ruling class and avoid the perils of failure and competition.  France and airbus is but one of thousands of examples.  American capitalism, while deeply flawed, has still allowed for the destruction of more corporate incumbents than any other system.

It is socialism that allows for a calcified ruling class of central planners and their cronies.  This market collapse is a collapse of cronyism in central banking and finance, not a collapse of competitive free markets. 

All the fear of deflation ignores so many modern examples where a competitive, deflationary free market delivers the most benefits to the most people.  Just look at the rapid explosion of access to computing and it’s ongoing success as a business despite deflation expectations that are inherent in it.  Tomorrow’s computer will be cheaper and better than today.  It will be more affordable for more people.  THAT’s free markets.

France tried to eliminate inequality by giving out computers to everyone.  What it did was crush the industry for computer makers in the country and set them back years.  Socialism is about picking winners of today to the exclusion of tomorrow.  It is not economics at all, but a religious hope for perfect leadership. I see no reason for such hope in this world.

Maybe I’d dead wrong… but I think the evidence is on my side.  Even Ralph Nader wrote in favor of deregulation when he saw how central planners in the airlines were maintaining monopolies.

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By Folktruther, November 21, 2008 at 12:29 pm Link to this comment

No, John, I am talking about the poor of the world being kept there by Democratic, market societies. In the US, the investment banks that hold the stock of corporations increase the wealth of their rich by decreasing the wealth of the population.

British imperialism destroyed the textile industry in India to initate its own, and through the opium wars largely destroyed Chinese economic power.

The US helped create the Asian depression beginning in 1998, its corporations buying up the remains at bargain prices.  As the US rich becomes richer, the US working class over the last four decades works harder to become poorer.

Schumpeter is full of shit, more so than most liberal economicsts.  He did say a few true things, however, like socialism is inevitable historically.

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By John Papola, November 21, 2008 at 10:58 am Link to this comment

“it is quite true that the world’s people are poor BECAUSE a few are rich”

Wow. That statement is truly amazing.  If this kind of sentiment lies at the heart of “progressivism”, I can rest easy knowing that I’m not missing out on anything as a libertarian/classical liberal.

You should really step away from the causal koolaid or at least make an effort to back this kind of statement up with some kind of broad empirical evidence.  The notion that wealth is a fixed or a finite commodity seems to be broadly and demonstrably false.  Entrepreneurship creates wealth.  It doesn’t steal it from others.  That is the State’s job, often in concert with politically connected big business.  Subsidy is the real theft as it is purely coercive. 

A guy like Steve Jobs building a business with a new product and generating hundreds of thousands of jobs with it’s production is not theft.  It’s trade and growth and expansion of wealth for all involved.

Take some time and read some Joseph Schumpeter. 

p.s. - if you’re talking about the poor of the world being kept there by tyrannical rule in non-democrat, non-market societies, then I can agree.  Despots do keep themselves rich by robbing the people.

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By Folktruther, November 21, 2008 at 10:43 am Link to this comment

Troublesum, although it is quite true that the world’s people are poor BECAUSE a few are rich, the situation is a little different in China.  There, instead of the banks controlling the government, the party controls the banks, the major ones being owned by the state.  This type of party capitalism, a new form in history, has been economically developing the country at an astonishing speed and promises to develop Asia, where most people live.  Every year over 40% of the gdp is reinvested.

However a Chinese ruling class has developed of course and although the power system is more effective than the neo-American one, with which the US can’t compete, it is likely a new type of imperialism will develop, and in the next few decades.

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By Back bencher, November 21, 2008 at 7:38 am Link to this comment
(Unregistered commenter)

Might I inquire why “New Orleans” is different from all the other abandoned cities nationwide?

Bridgeport Connecticut
Utica New York
Lewiston Maine
Springfield and Worcester Massachusetts
Newark and East Orange New Jersey
Cleavland Ohio
Gary Indiana
East StLouis Illinois
and on and on, from Chrome Avenue in Miami to Compton in California
From the dead papermill town of Millinocket Maine, to the drug infested poor side of Twin Falls Idaho, whole segments of society have been abandoned. They are not all black, not all hispanic, but all poor and without adaquate voice which they expected to get from this administration.

Poor them….suckers all!

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By Alan, November 20, 2008 at 9:28 pm Link to this comment
(Unregistered commenter)

Dear Mr. President-Elect,

We (many of your supporters) feel now that you are
co-opting our enthusiasm.  We, having cast our votes for you, see you throwing us overboard.  You well know that we voted for
a resolutely progressive governance, yet you are enlisting the
entire worn out reagan-lite Clinton team.
We do not approve, and we feel you may miss the opportunity
to make fundamental and enduring changes for the better,.
We don’t want a health care program crafted by a rich man’s
retreat of HMO executives.  We don’t want a crass manipulator
as Secretary of State.  We want the progressive governance that
we voted for when we voted for you.

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By John Papola, November 20, 2008 at 4:06 pm Link to this comment

I will say this.  The economic tsunami unfolding just might wipe away any gains in the past two decades.  Perhaps that will reveal them to be a sham of central bank inflation.

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By John Papola, November 20, 2008 at 3:01 pm Link to this comment

Regarding the poor people of New Orleans, it is without question that the government at all levels is and has been failing that community for a very long time.  Perhaps that’s racism.  Perhaps it’s systematic unaccountability and poor incentives.  Probably it’s both.

We’ll see how and who makes progress there in the next four years.  I’m going to put my bets on the private charities, companies and local organizations. 


If your “Power System” construct is referencing the central banks, than we are in agreement.  If it’s a more nebulous construct of collectivism and conspiracy, we’ll have to just agree to disagree.  Unless, of course, the president elect is in fact a secret lizard agent.  I guess anything is possible.


We can certainly debate the validity of information coming out of China, given it’s regime.  I’ve read the figure to be as high as 400 million from Cato Institute, which is an organization I find to be very credible.  You may not.  So be it.

Your claim about the upward redistribution of wealth requires more explanation and appears built on ideological notions of inequality instead of absolute improvement.  Again, if you’re talking about the austrian view of inflation as robbing from the rich, I’m in agreement.  If you’re talking about the explosion of wealth at the head of the curve relative to the tail… you’re in a different realm.

If someone’s at the bottom’s income improves by 20% while the people at the very top improve by 300%, it doesn’t follow that the top “took” from the bottom.  Wealth isn’t finite.  The guys that started google and became billionaires didn’t steal their money from the poor.

But I don’t want to sound like I’m holding water for the big guys.  I’m not.  Just pointing out that relative inequality is not the same thing as absolute improvement or decline.  You need to be more precise.  I certainly do as well.

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By dr wu, November 20, 2008 at 2:48 pm Link to this comment

Ho-hum, nothing new here—Obama is the good cop to Bush’s cop. And sadly, the more things change, the more they stay the same.
But we’re in a new ballgame here: the empire is over!
Our empire is broke, the spirit is lacking, the oil is peaking and the leadership is truly Roman.
Time to sit back and relax and enjoy the aftermath of empire—quiet nights at home, no running off to invade and torture, no more ponzi scheming, alchemisty whiz kids on Wall Street turning toxic mortgages into gold—now we can go quietly into the night and be like other post empire countries—Spain, Britain and Holland.

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By troublesum, November 20, 2008 at 2:46 pm Link to this comment

John Papola
“Hundreds of millions…”  Where did you get that figure?  And what constitutes being “lifted out of poverty”?  It sounds like propaganda.  There are approximately 2 billion of the worlds population living on less than two dollars a day or less according to UNESCO.  There has been a radical upward redistribution of wealth in the last twenty years.  Poverty is increasing not decreasing.

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By leilah, November 20, 2008 at 2:27 pm Link to this comment

By Folktruther, November 20 at 1:16 pm #

New Orleans, John, will not be rebuilt for 20 years not because it was hit by a hurricane, or because governemts are incompetent, but because they want to move the African-Amerians out and gentrify.
I couldn’t agree more.  New Orleans fits into the plan to reurn to the Roman city-state model.  In the modern version, New Orleans takes on the qualities of a theme park.

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By John Papola, November 20, 2008 at 2:18 pm Link to this comment


“In a parallel universe all the worlds poor have been “lifted” to new heights of prosperity.”

I believe that’s called making a strawman argument.  I didn’t say anything close to “all the world’s poor” being lifted.  I simply stated the fact that hundreds of millions of people have been lifted out of poverty by liberalization of trade and opportunity.  It’s not without it’s problems, but it is a statement of fact that I find to be a very positive development for the human race.

I’m just tired of people railing against the great satan of “deregulation” while ignoring the epic interventionism that is central banking.  So many allegedly interested people ignorantly parrot that we’ve been operating in a completely free market and it’s just a totally bogus statement driven by ideological confirmation bias.

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By Folktruther, November 20, 2008 at 2:16 pm Link to this comment

New Orleans, John, will not be rebuilt for 20 years not because it was hit by a hurricane, or because governemts are incompetent, but because they want to move the African-Amerians out and gentrify.  Germany after WW2 was rebuit in far less time by this same ‘incompetetn’ government.

You appear to want to live in a dream world. You have a lot of company.  China has moved hundreds of millions of people from the farms to the cities because the power system wanted to.  The US power system does not want to restore the homes of the people of New Orleans.  God has given the realators and developers a chance they always wanted and now they are taking it.

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By troublesum, November 20, 2008 at 1:57 pm Link to this comment

John Papola
How right you are.  In a parallel universe all the worlds poor have been “lifted” to new heights of prosperity.

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By Greenfish66, November 20, 2008 at 1:28 pm Link to this comment

The Clinton’s ,Obama and the Democrates as a whole would serve and be better served, IN THE LONG RUN,without Hillary as the Secretary…..

I believe Hillary could be president in the future if she does not except the job!!.. ( Condelisa Rice makes a great secretary… gender and race aside)

  .1 star is all you need to make good theatre ..Two will only cause conflict and contraversy!!...Let the democrates and america rule peacefully for the next 16yrs ..

I am afraid to look at what the alternatives for president are after that!!

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By prole, November 20, 2008 at 12:36 pm Link to this comment

Such expressions of righteous indignation as this from one who voted for Obama Copacabana “with enthusiasm” (see last weeks blog, Hawk’s Nesting) can’t help but sound more than a little hypocritically hollow. If you “buy” into it when it’s was up for sale - or worse still. helped to sell it. -. then you’re stuck with it for the next four years. No refunds, no exchanges. Perhaps it’s these fickle Obama voters that should now “perform rites of contrition” and be kept at a safe distance from the [reader]ship of our nation”. It never was change “we” could believe in - and never was intended to be. Despite reprising the Joan of Arc myth in the person of a plodding bureaucrat with a name straight out of central casting, Brooksley E. Born may not be quite the super-heroine portrayed in this yarn. In a 2003 interview, Born clarified her CFTC experience, “It wasn’t a regulatory effort. We were just asking questions! The concept release didn’t propose any rules. Alan Greenspan, Arthur Levitt, and Robert Rubin all said that these questions should not be asked… during a congressional conference committee meeting on an appropriations bill, an amendment was added preventing the commission from taking any action on over-the counter derivatives for six months… I thought it was very bad policy, but on the other hand it was congress’s decision to make”. She added, “I am very sorry that it turned out I was right, because it has been a disaster for a lot of people who have lost a lot of money”. Perhaps it’s not surprising that Born should be chiefly concerned about investors “who have lost a lot of money”.  She spent most of her time in private practice in the 80s & 90s at Washington law firm Arnold & Porter litigating high profile derivatives cases for foreign financial and other large institutions that were defendants in fraud suits, such as a large Swiss bank with customers that were co-conspirators with the Hunt brothers in manipulating the silver market then. Not exactly championing the interests of the indigent, you might say. No wonder,knee-jerk feminist Amy Siskind is so admiring of her. Siskind is also a great admirer of Israeli PM candidate and former Mossad agent and Ariel Sharon protege, Tzipi Livni. Siskind also holds former Israeli PM and terrorist, Golda Meir in high esteem. So you can see where she’s coming from. Like Born, Bair is a bland technocrat who has made a comfortable career in serving the powers that be as a private banker, academician and political appointee. In 2004 she made two large donations to the Bush/Cheney re-election campaign and one to Elizabeth Dole. Apparently, she didn’t believe in any “change we can believe in” then; and she hasn’t done anything since, in her brief tenure as Bush’s gal at the FDIC to indicate she’s committed to anything more radical than helping save runaway capitalism from it’s own self-destructive tendencies. So, if you’re looking for “change you can believe in” – and you’re not a self-interested commodities trader or lender – you’d better look elsewhere. For change we can truly believe in, someone like Doug Henwood would fit the bill much better. Keep looking.

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By John Papola, November 20, 2008 at 12:27 pm Link to this comment

@Folktruther & Felicity,

We all filter the world through our own confirmation biases.  You seem to believe that these evils of man are new and different and emerging now like never before.  I see no real evidence of that.  I see a world that over the course of the past 20 years has lifted more people out of poverty than at any time in our history.  China and India together, by embracing the decentralization of economic power, have lifted more than our country’s entire population out of poverty.

That’s progress.  I consider that to be a good thing.

As for this continual idea of a collective “us” with a shared moral compass… I reject that concept on it’s face.  We are not all cells in a larger organism that has morals in aggregate.  We each have our own morality.  Certainly our society can impact how we act, but I see no credible argument for a “shared moral compass”.

I certainly don’t buy this argument that the action of our government represents a “collective action by us”.  Again, the government is an organization in which most of it’s agents are NOT elected officials.  The overwhelming percentage of government agents are bureaucrats who feel no pressure whatsoever by the force of our vote and virtually no competitive pressure by other organizations.  They aren’t bad people.  But they are operating in an environment that lacks the structural incentives we know to work in competitive environments where failure isn’t sustainable.

This is why hundreds of billions in destructive, corporatist, payola subsidies get put into place and almost never taken away.  I mean, sugar quotas in 2008?  Seriously? There is NO competitive pressure on government agency akin to the macro balance of powers between the branches.  Now, if we were on a hard currency standard, at least the government would lack the ability to rob from the people through inflation to fund their programs.

Again, monetary policy is CENTRAL to the ability of government to wage war, empower elected and corporate incumbents with subsidy and rob the working class to give to the politically connected elite through inflation.

The notion that further central authority could produce net benefit given this setup, is just plain ridiculous to me.  The same goes for those pinning their hopes on these people to “fix” anything.

p.s. the reason New Orleans won’t be rebuilt until 2028 is because it was hit by a massive hurricane.  It’s a tragedy, and government’s incompetence doesn’t help matters, but that’s just the way government operates.  They’re good at spitting out byzantine 500+ bills riddled with goodies for their constituents.  Not executing in an environment of accountability. That will never change.  People had faith in government in the 1800s and early 1900s because it didn’t do much.  Now that government tries to do everything, we all get to see why an uncompetitive monopoly of force can’t get the job done.

...but what the hell do I know.

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By GW=MCHammered, November 20, 2008 at 12:05 pm Link to this comment
(Unregistered commenter)

Proud to delete employment, deplete investments, hedge bank and health care cost-shifting during the Bu$hCo disaster years. In hindsight, my foresight was right on. EXILE THE BU$H ENDEMIC.

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By felicity, November 20, 2008 at 11:56 am Link to this comment

John, indeed ‘our’ moral compass may exclude a great many individuals; however, I am unable to exclude myself because I’m allowing it to happen and am therefore equally guilty.

The people of New Orleans, I’m sure, are most grateful for the individual help they are getting; however, at the current pace the city is not expected to be rebuilt before 2028, a shameful fact directly attributable to the inaction of a government that we elected, that works for us, that represents us to the world. There’s the ‘we’ in the ‘our.’

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By Folktruther, November 20, 2008 at 11:51 am Link to this comment

No, our moral compass isn’t the same, John.  It has deteriorated with the American and Western power system.  As the power structure has become increasingly dependant on violence, bribery, theft and deceit to exert its will, the corruption of the American people increases as well.  Violence breeds violence, corruption corrupts, oppression oppresses, and people’s worldviews are increasingly affected by it.

The American power system is reaching the end of its lifetime and becoming decadent.  It is unpatriotic to say so in a simple way, it is something that Americans don’t want to hear, but it happens to be the simple historical truth.  It is a truth that the American people must accept to find a way forward.

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By John Papola, November 20, 2008 at 11:03 am Link to this comment

“Got to wonder what happened to our moral compass”

People haven’t changed, felicity.  And there is no “we”.  There are individuals, operating within organizations and trying to get the most out of their individual situation.

Government is not charity and is not collective action.  It is an organization with it’s own set of incentives just like any other organization.  The monetary system as well as the regulatory structure has perverse incentives that have lead to where we are right now economically.

The fact remains that American individuals, in aggregate, give billions to each other and abroad in charitable money and time.  “We” take care of each other.  “We” take care of strangers.  “We” fill in the gaps.  We give and invest in dramatic excess of the totals that government acts.

The great populist error in political rhetoric is the idea that the government is our only means of non-profit action.  That it is our primary collective device.  It is not.  This isn’t a Hobbsian world vs. a world of europeans socialism.  That isn’t the two choices, despite that being the discourse.

Just ask the people in New Orleans who are at this very moment having their homes rebuilt by private people and charities while the billions in federal funds sit behind red tape.  “We” take care of each other, as “we” always have and always will.

The government, on the other hand, sits in the unique position of lacking true structural accountability while having monopoly power of coercive force.  This is why big business pushes through regulations that punish competitors under the false guise of “protecting the people”.  This is why hideous and destructive policies like ethanol subsidies and mandates remain in place despite the universal recognition that they are starving the world’s poor and providing no ecological benefit.

“Our” moral compass is the same as it ever was.  The political class has just perverted the incentives and gamed the system.

The banks collude with the Fed and the treasury to print money and rob the poor with inflation, while the hacks in washington rob the taxpayers to pay off their constituents for re-election.  That is the structure in place today and change of management won’t impact that.

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By felicity, November 20, 2008 at 10:14 am Link to this comment

Got to wonder what happened to our moral compass - we did have one once - when zillions of dollars are now sloshing among the obscenely rich, the only conundrum being who among them will get how much of them, while 1 out of 6 American children is living below the poverty line (that’s below, not at.) It’s a very ugly picture.

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By GW=MCHammered, November 20, 2008 at 10:05 am Link to this comment
(Unregistered commenter)

No more welfare for the rich!
(wanda sykes comment still relevant)

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By S H Mills, November 20, 2008 at 9:13 am Link to this comment
(Unregistered commenter)

Harvard alum Iris Mack, MBA/PhD requested a meeting with Larry Summers to express her concerns about how her Harvard Management Company (HMC) boss Jeff Larson was attempting to use derivatives to manage an HMC portfolio.

Larson eventually left HMC to start Sowood hedge fund with hundreds of millions of dollars of Harvard alums’ donations. Sowood was one of the first hedge funds to blow up during the subprime mortgage derivatives crisis.

Dr. Mack communicated with Summers’ office regarding such derviatives trades. Perhaps, she probably could have saved Harvard alums hundreds of millions of dollars if Summers had bothered to continue to hear her out before forcing her resignation.

There is a wealth of information describing this derivatives whistleblowing case: correspondence between Dr. Mack and Summer’s office (emails, faxes, snail mail, phone records, etc.); legal documents; reports from FBI and DOJ interviews, etc.

Given all this, you have to wonder whether Summers was either too
(a) corrupt and wanted to coverup up something(s) at HMC.
(b) arrogant to think that Dr. Mack had anything of value to tell him about mathematical finance and derivatives. Please recall Summers’ comments about women and math. Also, please note that Dr. Mack has a doctorate in Applied Mathematics from Harvard and a Sloan Fellows MBA from London Business School.
(c) incompetent to understand what Dr. Mack was trying to warn him about regarding derivatives trades in HMC portfolios.

Did Summers try to silence Dr. Mack the way he, Rubin and Greenspan tried to silence Attorney Brooksley Born of the CFTC? Who knows what goes on in Summers’ head? Nevertheless, he seems like a dreadful choice for our nation’s next Treasury Secretary.

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By thebeerdoctor, November 20, 2008 at 5:32 am Link to this comment

Robert Scheer is correct, but have you noticed that neither Born or Bair have been even mentioned in consideration. I saw Summers on a televised conference during the middle of the call for this bail out… what an arrogant piece of work he is.
Alas, with Penny Pritzker said to be Obam’s commerce secretary choice, the only change we will probably see is rotten neo-conservative, being replaced by rotten neo-liberal… the kind of people who will make excuses if the next administration, continues to blow up innocent people in Afghanistan and Pakistan.
Expect the worst and hope for the best…

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By yellowbird2525, November 19, 2008 at 11:00 pm Link to this comment

watch c span folks: Michael Calhoun, Pres of center for responsibility lending; the LENDERS were bribed: and told to “steer” the people into mortgages that were higher interest, & riskier when in reality they qualified for far better interest rates, etc; (PREDATORY CAPITALISM); it is all illegal; there are laws & our Congress folks knowingly let it go on just like they did the illegal credit card rates & addl fees; which also by the way show up in great detail & great fraud in the bankruptcys; voluntary modification has been tried for 2 years & isn’t working; because ta da! one person who spoke & with great detail & attention to their needs wrote up “refinance” and even went to their homes to go over in great detail; reading it to them, making sure they understood all the “technical” terms, etc; they signed; & later learned he had failed to mention where the house was now his. 200 homes at last count & still climbing. FBI knows, doing nothing, cuz Congress don’t want them to. Others: refinance, great “fixed” rate, for a TIME: then “suddenly” rate is triple what it was before they refinanced to lower rate; no explanation given. Kinda like those credit cards: where the COLLEGES were bribed: to promote “student loans” that were far higher & addl fees by the colleges; & the “credit cards” with the school logo on them; like “yale” etc; same, higher interest, added fees; explanation given to Congress by Citibank I believe it was Pres when b/4 Congress by NY special DA: “they were adults”; Congressman nodded; nothing done. even tho illegal; we are a nation of “lawlessness folks: our “lawmakers” are breaking the law, have removed all laws protecting the people, given all laws requested by Corps to them; the people have nothing; & Supreme Court is of course, part of the “political parties” & there to “rule” if they choose to do so, on THEIR side. Watching is extremely enlightening. You learn a great deal. Now, the author of Shock Doctrine is talking of “disaster capitalism”; its because it is criminal & fraud, & has been for a great long time folks;

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By Outraged, November 19, 2008 at 10:05 pm Link to this comment

This isn’t a rightist leftist issue.  In fact it isn’t even CENTER.  This is one of the fox guarding the hen house.  From the NYT:

With the battered economy the most immediate problem facing him when he takes office in January, Mr. Obama interviewed Mr. Orszag in Chicago last week for the cabinet-level job of director of the Office of Management and Budget, people familiar with the transition said.

Mr. Obama’s budget director will have to scramble to draft a proposed budget to be ready soon after the Jan. 20 presidential inauguration, and to help with the economic stimulus proposals that Mr. Obama has said he will offer after taking office.

Like several other candidates for top posts, Mr. Orszag is a protégé of Robert E. Rubin, former Treasury secretary to Mr. Clinton, and shares Mr. Rubin’s centrist approach to fiscal policies and concern about big deficits.

Mr. Orszag was also considered for the job of director of the White House National Economic Council, which coordinates the work of the president’s principal economic and fiscal advisers. That post is expected to go to Mr. Lew, another Clinton White House veteran who is now chief operating officer of Citi Alternative Investments, a unit of Citigroup, where Mr. Rubin is a director.(emphasis mine)

This claim that Obama needs “experienced” people in these positions is crap.  So do you want the “experienced” molesting child care worker in charge of your children…?  Think about it….. you CAN’T deny their “child care” experience….can you?

Here we are, right back to Robert Rubin…and what is Robert Rubin, why usually he’s GOLDMAN SACHS.  What a bunch of rot.

From Wiki regarding Robert Rubin and his ILK…excuse me….proteges’

In 1999, affirming his career-long interest in markets, Mr. Rubin joined Citigroup. Of note, the supermerger between Travelers Group and Citicorp was facilitated by the repeal of the Glass-Steagall Act (Gramm-Leach-Bliley Act). This legislation was passed under the Clinton administration, days before Rubin’s resignation. Consolidation of investment, commercial banking, and insurance services as practiced by Citigroup under the direction of Rubin has been implicated in the subprime mortage crisis. He sparked controversy in 2001 when he contacted an acquaintance at the Treasury Department and asked if the department could convince bond-rating agencies not to downgrade the corporate debt of Enron, a debtor of Citigroup. Rubin wanted Enron creditors to lend money to the troubled company for a restructuring of its debt; a collapse of the energy giant might have serious consequences for financial markets and energy distribution. The Treasury official refused. A subsequent congressional staff investigation cleared Rubin of any wrongdoing, but he was still harshly criticized by political opponents.

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By CJ, November 19, 2008 at 9:19 pm Link to this comment

Not that Obama ever seriously appealed to so-called “left base.” He counted on being the only alternative to McCain. Lot of talk about change, which got young to voting booths. (At least youth are paying attention, or have noticed that policy can impact them in serious ways. They remain too young to know of Clintonesque flimflam in collusion with “technique.” Real Buffalo Bill)

As one who backed the bailout (along with Barbara Boxer, who I thought brave in defying both liberals and conservatives in opposition), I thought it smart ONLY if regulated. (Krugman said as much too.) I should have known better than to think Congress would do more than give it away. This IS America, which IS bastion of capital, wherein government serves the interests of one class. Very stupid of me, though in principle the bailout—under circumstances of capitalism—is still necessary. Thievery notwithstanding. Congresspersons who voted, “aye,” maintain they were—once again—hoodwinked. Paraphrasing Dickens, the Congress is an ass. But I knew that already.

I agree with Scheer re Summers and Rubin, both fat cats, same as auto execs. It’s not like ANY of these people ever knew or ever will know economic pain. But I’m fine with appointing Born or Bair, though they—female or not—are of same class. I appreciate they’ve demonstrated greater foresight and then responsibility. But are “leaders” necessary as overseers, of us—unruly masses, given to greed, otherwise oversexed and prone to other addictions, including to various Gods? And to criminality, if prison population is to go by. Conservatives blame liberalism, while liberals blame ignorance/stupidity that conservatism exploits by cheaply appealing to the worst in humanity. (Reagan banked on the worst in and among us. By the time Georges, 0 and 00, came along, no sweat. Then Buffalo Bill & Co, exactly as Scheer recounts.)

Ironically, those of so much merit—so smart and so wise—aren’t so much smart and wise. It’s as though we’ve granted leave to the really worst among us to rule over us. We grant them leave via formal democratic system, thereby also absolving ourselves of responsibility. “It’s their fault, not ours.”

Finally, this bizarre arrangement, including big media as it performs shtick, absolving any and all of responsibility. “The devil (who’s us) made us do it.” (Flip Wilson was a lot more ironist that we thought.)

Reason has gone missing, like these kids forever disappearing, never to be seen or heard from again.

Ideally, this period would be occasion for some kind of reflection on whether the system actually works on behalf of vast majority, especially those in their capacity as laborers. I’ve not heard or read asking of question: “Is this the best of all possible economic worlds?”

FDR, directly fiercely challenged, was forced to go a different way, if power was not to be relinquished entirely. He did what he could given time and circumstance. Did okay too, though war played large role. But if Quayle was no Kennedy, Obama’s no FDR. Nor Lincoln. Because we are not who we were.

We’ve let another opportunity slip by. Democracy could be realized in substance, but we listen to big media that serves as definer of ideological limits on behalf of prevailing (bugaboo: aristocracy that is now defined as, and appears as, meritocracy—technological “experts”) power.

Far better were we to choose sometime—quite legitimately, exactly as democracy we claim is in fact founded in social-legal contract—to nationalize: banks, industry, other forms of big business; all to be owned and operated by those who labor there. On behalf of themselves and of all the rest of us, who might be happy did we not persist in denying ourselves so much as halfway serious pursuit of happiness. In lieu of dreaming on and on and on and on.

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By Steven, November 19, 2008 at 7:18 pm Link to this comment
(Unregistered commenter)

The Federal Reserve and the Treasury Department need to go.  The founding fathers explicitly warned about a central bank, that is why the constitution gives the power to print money to the federal government. 

Simply put, our money is worthless.  When we need more money because the cost of goods rise or we run out, we go to work.  The banks just turn to the Federal Reserve to print more to give out to their friends and politicians.  Basically, we will go through many more of these recessions and economic shocks.

As for this economic recession, those who have the political clout i.e. the Goldmans Sachs or those who weren’t egregiously greedy i.e Bank of America, JP Chase & Wells Fargo are just waiting for the dust to settle to see what market share they can pick-up at bottom bargain prices.  Once they determine there are no more little fish to buy, they will resume issuing credit.  But they are in no hurry because the government is ready to give them all the money they need in the meantime with no strings attached.  How you ask?  It’s easy, it goes something like this:

Paulson:  Yeah Ben, Hank here.  My boys over at Goldmans need a little extra dough. 

Bernake:  No problem, how much?  I don’t know when I can get it to you, the money printers here are totally backed-up.

Paulson:  Geez Ben, they need a few billion in a hurry, these homeowners are going under like hotcakes leaving my boys with some serious bills to pay.  I mean, what do you want them to do, give up that 5th house in Greece?

Bernake:  Don’t worry, I’m on it.  We can always get Congress to write you a check if you need it sooner.

Paulson:  Nah, we’ll wait, they’re starting to annoy me over there.  Can you believe they’re actually starting to ask some real questions?

Bernake:  You serious.

Paulson:  Totally joking.  Just send me the check, and spell my name right this time.

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By Folktruther, November 19, 2008 at 7:14 pm Link to this comment

Vision, smision, RealFish.  Nobody is arguing against his appointments because they or his is incompetant, but because they continue the same policies of Clinton-Bush.  Fake Progressives will accept these policies and rail at leftists who actually want to change the policies of the Amerian power system to lessen class inequality, promote progressive entitlements, and to end the wars.

Since Obama’s substance differs from his tone and vacuous calls for change, his appointments are being obviously being made to continue conservative policies.  This is apparently difficult for those hung up on superficial vacuities to understand.

The problem with inflation, John, is that it is typically partly induced by economic growth, which benefits the population.  So progressives are more willing to accept it than conservatives, who prefer anti-people policies that benefit the Elite.

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By blog dog, November 19, 2008 at 5:48 pm Link to this comment
(Unregistered commenter)

RE: “...adequately fulfills Mr. Obama’s promise to bring change.”

If this represents a feeling of ease about these same old faces (good ol’ boys), that suggests they’re actually welcome, then do indeed “push him” and push him hard, before the rabble starts loosing it and somehow manage to coax the specter of Robespierre from his tomb, long enough to serve up to a cheering throng in Battery Park, the horror of La Place de la Concord redux.

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By TheRealFish, November 19, 2008 at 5:28 pm Link to this comment

Here is what I do not understand about the current state of breathlessness over all these cabinet nominations:

Why is it, assuming Obama was elected because of *his* thoughts and qualities, that as soon as he pulls-in anybody for any position in his forthcoming cabinet, it’s like a reset button is pushed and commentators automatically assume he is an empty vessel waiting to be filled up by whomever is a given appointee?

Or that he suddenly becomes powerless in the face of the force of his appointees’ personal ideologies or past actions?

The biggest problem with the Clinton administration is that Bill Clinton did not have a cohesive personal vision, and allowed his underlings to push policy.

If you voted for Obama, do you actually believe he has no personal vision? Or that he is actually that empty vessel so many tried to make him appear as they failed to beat him in the various campaigns?

I voted for him because he is obviously scary-intelligent, and just as obviously knows how to manage. As a management type in my work life, I am in awe of his ability to bend his minions to his will and his vision, and gets them to do so with a smile. I wish I had maybe 10% of that ability.

These hirelings are being brought on board to follow his direction, not to lead him around by some invisible nose ring on the tether of their immense ideological powers.

He promised he would work across the aisle—and I believe that means across the Democratic aisle as well as the expansive gulf between Republican and Democrats. If any readers here believed that and voted for that, then what is the surprise, and what is this breathless fearfulness?

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By EV Debs, November 19, 2008 at 4:57 pm Link to this comment

Bulls-Eye is right! Rubin and Summers came from Wall Street, will eventually return to it and are part of the PROBLEM…  I was hoping for someone with a consumer advocacy backround (Ralph Nader, Harvey Rosenfield) to be Attorney General or at least head of the SEC. That would have shown that he was SERIOUS about change and sent many in the business community heading for the CostaRican rainforests. Secretary of Labor is another one. Unions will be mighty unhappy if he continues this trend and picks someone like, say, Jason Furman. In his election night speech he urged us to “push him”. We’ll have to heed his advice.

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By John Papola, November 19, 2008 at 4:53 pm Link to this comment


Do you see?  The Fed prints money and gives it to banks and the government.  The banks lend it at a multiplier determined by their reserve requirements and the government spends it on all their programs.

These first receivers of the new money spend it at today’s prices.  These include the politically connected businesses that contract with the Government.  As that spending goes through the system, pushing up prices, it is the average person that is hurt because their wage is the last to rise and so they get to pay for $4.00 gas while the government contract who got that money two years ago paid $1.50.  This is how inflation takes from the poor and give to the rich.  THIS is the reverse redistribution.  NOT tax policy.  Price inflation is a hidden tax that we all pay at the pump, with our homes and our grocery bills. Oh, and that medical inflation is key too, since medicare accounts for half of all US health insurance.

But nobody, including Mr. Scheer seems to explain this to people or understand it themselves.

Maybe I’m completely mistaken, but I don’t think I am.  Please, someone correct any mistakes I’ve made.  it’s complicated stuff, but it’s crucial.

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By John Papola, November 19, 2008 at 4:52 pm Link to this comment


Here’s the thing to consider.  The government has three means of funding its operations. 

#1. Taxation & Tariffs
#2. Borrowing through the sale of treasury bond.
#3. Having the Fed print money out of thin air to buy Treasury bonds.

Now, when we were tethered to a gold standard, the government was limited essentially to #1 and #2.  The ability of Treasury bond holders and US dollar holders to seek redemption of their holdings in gold prevented the Federal Reserve from debasing the currency through massive inflation.  In effect, if a person or entity that held dollars believed that their value was going to decline because of too much money being printed, they could (and did) ask the government to exchange the currency with it’s value in gold, which they could then take and use elsewhere.

So this limit kept the government’s power in check and forced fiscal policies that maintained some relationship to reality (unlike today).  The government had to live the way you do.

After LBJ went nuts with guns-and-butter war and entitlement spending and sunk our country into deep deficit, foreign governments essential ran on the US Treasury.  Nixon was forced to halt this redeem-ability and with it ended the Gold Standard.  The subsequent unleashing of the Federal Reserves’ printing press lead to the massive inflation during the Carter administration.  #3 is not a sustainable way to fund the government.

But how does inflation work?

Well, the Fed has three levers by which they centrally plan and control our monetary supply and financial system through the Federal Open Market Committee.

#1. The purchase and sale of government bonds with newly printed money (which controls the total money supply)
#2. They set the “discount rate” through which banks take short term loans
#3. Setting the reserve requirements, which enables banks to expand their credit at a multiple of their reserves.

When people talk about the Fed “setting interest rates” they aren’t talking about the discount window, which is a lending mechanism few banks use.  The Federal Funds rate that is always discussed is a market rate and the Federal Reserve pushes that rate down or up by expanding or contracting the money supply using the tools above.  If they want to keep the rate down, they flood the banks with money, which makes lending rates go down.  It’s supply and demand.

So, when the Fed “kept rates at 1% from 2001 to 2004”, what they were doing was flooding the financial system with fresh money to keep lending cheap.

So “inflation” is the increase in the money supply.  The price increases come much later as that money makes its way through the economy, pushing prices up as it generates demand.

And that’s what we got.  Sky high prices in housing as well as commodities like food, grains and… oil.

This was centrally planned price fixing at an epic scale and it should make anyone here claiming we’ve been living in “unbridled free markets” close their mouth and open their eyes….

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By TheJaundicedEye, November 19, 2008 at 4:32 pm Link to this comment

I have seen a lot of comment concerning the choices our
next president has made or is going to make for people to work for him.  A great deal of the commentary has been incredibly ill informed and just plain stupid.

In my opinion, Mr. Obama has not, in any way, stated or implied that he would choose only new faces for his
staff.  What he told us was that there would be change.
This promise is being kept.  The people Mr. Obama is choosing are experienced, competent and, one hopes, honest.  The change offered is not that of fresh faces.  It is the provision of reasonable, fair,
open and liberal approaches to the business of government.  This is in sharp contrast to the willful
stupidity, compulsive lying and hiding, deliberate
ignorance and brainless bullying which has been demonstrated from Washington, D.C. during the last 8 years.
In my opinion, this change more than adequately fulfills Mr. Obama’s promise to bring change.
Live long and prosper.

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By Folktruther, November 19, 2008 at 4:23 pm Link to this comment

Thank you very much, Arrow.  But wouldn’t creating Greenbacks to pay of Government debt enormously increase inflation?

Not that it is feasible for Obama to do it of course, or even want to.  What you are talking about is a political-economic revolution in the power system. 

The current depression will not be world wide. Although in the US the banks control the government, in China, which has approximate the same total GDP as the US in ppp terms, the party controls the state owned major banks. They have capital controls and mostly a ‘real’ economy rather than a financial one.

Are you any relation to the economist-game theorist Arrow and his famous axiom?

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By A. Z. Arrow, November 19, 2008 at 3:57 pm Link to this comment

Part One

It is the return of the Clinton administration minus Bill and Hillary –AIPAC’s golden boy Rahm Emanuel and the same folks that passed NAFTA and CAFTA – that fought to weaken labor unions, attacked welfare mothers, and set up a swift and expedient export of Capital, industry and jobs—and turned health care and medical hospitalization over to the private insurance companies and to the mercenary HMO’s. Change –phooey!


Abe Lincoln was faced with a multitude of local currencies –including metals- and to a vast mountain of federal debt caused by military borrowing for execution of the Civil War.

Lincoln realized that bonds and dollars are, in one sense, the same; both are ultimately a variant form of currency based on a conventional recognition and on acceptance of notes and/or dollars nused for the exchange and for the expansion of wealth and arrangements that underlie the economic and credit system. For Abe, the question became: Who creates and controls this expansion of wealth?  Who produces money, debt and currency expansion by means of credit? Why should a government produce bonds and promissory notes rather than producing dollar currency needed to cover their obligation?  Isn’t wealth and credit itself a natural economic result of the application of the energy, organization, ingenuity, and powers of labor and skill –a result of economic activity? Abe realized that Bonds simply bring debt and future indebtedness to the American people, while the production and circulation of dollars, specifically, as a people’s currency, can circulate and expand wealth directly and will naturally produce credit and growth required for trade and exchange within the people’s real (rather than bookkeeper’s) economy. Produce dollars directly rather than remain a slave to bond holders(or to the federal Reserve of our day). Otherwise the future of America will remain perpetually impoverished due to indebtedness that is repeatedly generated by war and banking policy –war and debt which is identical to banker’s drive for profit. And he concluded that currency in the form of dollars must act either on behalf of private monopolist or for the American people themselves. So his question was about who ultimately controls the economic destiny of “our” American economy.

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By A. Z. Arrow, November 19, 2008 at 3:56 pm Link to this comment


Elegant Solution: render the control of the money supply, money production, and its’ “mystical, expansionary powers” directly into the hands of the American people, and use this power to wipe-out government debt while covering the expense of re-occurring government deficits (that are incurred through the actual requirements of a multitude of needs for service(s) by the American people). Produce “Greenbacks,” a multi-functional currency directly, and expand credit and have it owned directly by the American people.

Abe Lincoln did this to pay off the debt incurred by both the Union and the Confederacy at the end of the Civil War. In all wars the banks insured that victors are required to cover the liabilities of the vanquished and that these terms are included in the peace settlements at the end of wars, only because they have previously extended credits to both sides of the conflict and to all armies of hostilities nations. They help purchase weapons for all sides in every conflict. The banks made loans to the North and the South in Lincoln’s day, and in the last century, to both the Axis and Allies nations for their military mobilization. They do this through loans and special credits during periods of both in war and peace and they are sure to help dictate the peace settlements. [For example, after WWII the terms generating the Marshall Plan—European Recovery Program, ERP ) [Note-3]

Besides this, the Greenbacks were so elegant that it took the plundering thieves and banksters another 57 years to undermine those “Lincoln dollars” that he said were backed only by “the good will of the American people.” [Note-2]  With Greenbacks, all debt could be covered;  government debt paid off, credit placed under public ownership, via universal public-currency along with a generation of public economic wealth created by the American people themselves, and, specifically, by the power of American labor without a mystical monopoly of Moneyed Private Interests. He used Greenbacks as generators for expanding credit.

This was Honest Abe’s genius idea.  And it is currently my fanciful solution.

Lincoln told the plundering European and American banksters to either accept these newly printed Greenbacks or they would get nothing in return for their self-fulfilling illusions and their supposed claims on future American wealth or for the interests paid them out of tax revenue as payments on their privately owned bonds (with the underwriting of these loans and private notes derived from increased government taxation) that was brought into being by the desperation and waste of fratricidal war.

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By A. Z. Arrow, November 19, 2008 at 3:52 pm Link to this comment



Among other conditions and concerns, All economic crises and booms, and every Empire war, is driven by banking policy. Bankers have never seen a war they didn’t like: Wars are good lending opportunities. Right now, the Federal Reserves (which is a private corporation supposedly a “quasi public” system is formally,  structurally and organizationally a private concern, in reality, the Federal Reserve functions as a organizational extension of the investment houses and major banks. The Federal Reserve Bank controls the issuances of US currency (money supply), the interests’ rates, credit among banks and the payments made; and, indirectly, the life styles of the investor strata, and corporate stock- holders, and the plunder-ring Elite; It shapes the economy through credit and determines the degree of monopolization of wealth, and uses loans to dictate which markets are developed: It subordinates history and creativity to ideology: and by the use these powerful mechanisms with Congressional subservience the American people’s economic well-being is placed at the mercy and service of the Plunder Elite by this private Federal Reserve, along with the private Banks and bansters as sidekicks: these banks thus manipulate the general state of the economy. These banksters in the Feds serve as generators of credit “out of thin air”- they are in constant pursuit of their economic self-interests, and their self-serving tinkering within the economy is aimed at those ends: the Feds advance economic policies that serve their own exclusive political ends: the Feds intentionally generate swings of “boom and bust” within the economy and Stock Market Gambling Houses: and the Feds serves the bansters, basically,  their ever pressing need to create a growing demand for lending, to facilitate their intensification in the monopoly of wealth; and also for exclusive sociological and political ends that aim to benefit the wealthy-elite and to insure the economic and political domination of finance capitalism’s ideology of privatization in politics while they impose conditions that divide the masses into contending ideologies and conflicting “life styles”—into contending stratas – of the rich, the poor, and the confused.—Stratas of Race, Religion, Region, Age groups and social roles.

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By A. Z. Arrow, November 19, 2008 at 3:50 pm Link to this comment


The Federal Reserve basically operates on behalf of their constituents of private investors, on behalf of the finance houses, and always for the banks . . .Wars, and frequent economic crisis expand their lending powers. “Hard times” and the swing into “good times” are both their opportunities for the banks to prosper. The US Treasury is their printing house. The private Banks also own, via legal claims on past settlements, all the gold in Fort Knox and all the silver and diamond reserves warehoused by the Federal Government. (Not that long ago, these accumulated holdings were the property of the American people.) The American people have been systematically stripped of their community wealth through debt.

For every dollars worth of bonds purchased by the Federal Reserve, the banksters are able to create ten dollars of credit-money out of thin air: this production of wealth in the form of credit is called “Fractional banking.” It permits finance capital to extend loans and credit for such things as home mortgages, for industry and business, and, especially, for the military-industrial complex, as well as bringing into being that portion of artificial wealth used to sustain the pleasures and luxuries of the elite within America’s wealthiest strata. In return, for this exclusionary right to “create”      “wealth” “out of thin air,” the governments of the United States (meaning local, state, and the Federal governments) issues “bonds” that are purchased or transferred to private investors and mostly owned by domestic and foreign banks (yes, by both domestic and foreign capitalist) and are paid for with monies supplied by “our” federal government through licensing and sale of bond, notes and creation of bank monopolies themselves. The re-use of these bonds for loans and creation of credit, and the peddling off of “Treasury notes,” on the issuance of dollars, that accompanies this process serve to indebt the seller. It is not like selling your used car tires. These bonds and banks themselves are purchased on margin by the use of government contracts and by exploitation of public wealth for private ends. Government issuance of bonds assumes an absolute fiduciary obligation by the same public to pay all interest and fees accrued. The trustees and benefactors are without conflict over their gain,without fiduciary obligation to nation, or borrower, or individual borrower, or to the American people while the payments on interest, along with the original public capital that was advanced for the “creation of credit out of thin air” —goes straight to the private monopolist of finance capital: there is ten dollars gained as credit for every dollar coughed up by the American public in the form of “debt”  with its’ unending generation of liabilities transferred to the taxpayer via taxation liabilities imposed upon the American people by their corporately controlled government on behalf of these private banks: the banksters are assisted in this drive for monopolized wealth with lobbiest that acts like organizational overseers of Congress, and also by some of the elected crooks that work night and day for the expansion of private finance capitalism:  by political representatives that are often themselves “investment” capitalist (meaning helpers in the “legal” divestment the American people of our wealth, energy, dreams and labor). The lending institution at the Federal Reserve hold no fiduciary commitment to the American people or to this nation.

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By A. Z. Arrow, November 19, 2008 at 3:45 pm Link to this comment



Yesterday, - 11/7/08- in his first economic press conference –about with the economic crisis and the future plans of his administration, the President Elect Barrack Obama mentioned that he has been studying the Lincoln administration. The American people need a solution to the expanding economic crisis. They need to wipe out all current and future debt.  So, it is either new draconian measures of regulation or outright cancellation; or, should there be no restructuring of the finance system, it will certainly end in the Economic collapse of the World’s Finance System (in a CRISIS generated by the old -time reactionary myth and anti-topian ideology of “Trickle Down,” and “unbridled Free Market”-eerism as practiced by the Bush Gang (and by a failure to built into the Federal Reserve and Treasury system of money and finance—a logical means to distribute wealth on the one side of their ledger— and the policy of monopolization and theft of wealth on the other side; leaving both the money (bookkeeper’s) economy and REAL ECONOMY subject to theft and waste through credit and bailouts vis the creation of loans under the control of banking pirates with their their “derivatives” “credit and liability and debt swaps,” etc; by a system based on finance capitalist ideology, on political domination, on an unworkable economic model accompanied by outright corporate control of government that perpetually services the exclusive interests of finance capital and by generating the supplies for the pig pen in which he “rich” wallow; by governance limited in its mission by a horde of lobbyist that control Congressional representation and own many of the politicians outright that the American people elect.  And by a system that, “altogether”, are “all for one” and that offers the American people nothing in return but trouble, economic and political crisis periodically, war and deprivation regularly; and social and economic debt for all time to come.

The real economy -–the economy that the American people live in—demands, first of all, a democratic DOLLAR, an honest public government and a new financial system, the American people need an immediate solution to the coming Great Depression before this hits us all at full force.

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By A. Z. Arrow, November 19, 2008 at 3:43 pm Link to this comment



Bring Back Greenbacks, produce American dollars greater than the accumulated face value of all bonds and pay off all government and mortgage debt, underwrite all existing personal and credit liabilities, and all credit payments made to the thieving monopolist, credit swappers, by the derivative bundle-ers, and take away the private banks and private Federal Reserve corporations’s ability to “create wealth out of thin air.” Put all of this in a locked-down Public Trust Fund (much the same as the original mission of Social Security was supposed to be) and replace this with Greenbacks as a long term (say 1000 year liability) with small annual payments. And give all these powers and abilities to extend and create credit—in the form of New Greenback Dollars—as a gift to the American people and back into a US Treasury headed by publically elected managers. [Note-1]  Put government—acting via Greenbacks—in the business of expansion of credit and wealth “out of thick air of productive work and jobs” by placing our currency under a system public ownership system on behalf of the American people—with the placement of a New Dollar via new laws, and solution to pressures caused by the pressing need for restructuring the existing sham bookkeeper’s economy- and by destroying thisartificial “gamblers economy of the “finance capitalism system ” while replacing it with a public currency system of creation and expansion of wealth with a real economy, with wealth emerging from the Economic Activity of the American people and an economy that is base on industry,  production, with a diversified technological economy .

Don’t cancel the national debt. Pay it off with Greenbacks. Nationalize the Treasury and Federal Reserve.

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By A. Z. Arrow, November 19, 2008 at 3:42 pm Link to this comment



Barrack Obama might be forced by the current mounting economic crisis and by unprecedented circumstance - by the distorting realities underlying this economy—to either discover, ( or to ignore at his own political peril,) the economic proposals made explicit by John Aylesbury (his letter below) and thus the new President will hopefully discover on his own, that this is the easiest method to avoid the certainty of a coming Great Depression.

So, allow me call attention to Aylesbury’s specific (and sound) economic proposal:

“The solution is not outright socialism. The solution lies in obliteration of the power of Wall Street, the futures markets in Chicago, and the City of London, with the aim of restoring the credit function of the economy of providing financing for real economic activity. In other words a full frontal assault on finance capitalism and the forcing of Wall Street and other Stock Markets to accept a return to industrial capitalism.
We need the termination of mergers and acquisitions, the end of financial derivatives and fancy incomprehensible instruments, the end of junk bond buyouts and corporate raiders. In other words the end of gaming with the people’s money.”


Note 1.

Greenback may refer to:
· A term used for the United States dollar.
· A modern (since 1914) United States Federal Reserve Note. Important distinction.
· A United States Note, (U.S. Note) among the first national United States currencies, authorized by the Legal Tender Act of 1862, and issued for more than a century, until 1971. This was the first greenback and was government-issued currency, different from the central-bank paper currency (Federal Reserve Note) that the United States began to use in 1914, and exclusively now uses. The two types of notes had similar green-inked backs, but the later Federal Reserve note was distinguised from the older U.S. Note by an green rather than red treasury seal on the obverse side of the note.
· United States Greenback Party, an American political party that was active between 1874 and 1884 which advocated government-issued currency. More. . .

Note 2.
The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act, it is a quasi-public (government entity with private components) banking system[1] composed of (1) the presidentially appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) twelve regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the U.S. Treasury, each with its own nine-member board of directors; (4) numerous private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils. As of February 1, 2006, Ben Bernanke serves as the Chairman of the Board of Governors of the Federal Reserve System.  More. . .

Note 3
Marshall Plan:

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By Folktruther, November 19, 2008 at 3:36 pm Link to this comment

The reason I ignore it, John, is because I don’t really understand it.  Is there any brief, simple explantion of the origin and function of the Federal Reserve?  Or perhaps you could supply an overview here.

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By Blackspeare, November 19, 2008 at 3:25 pm Link to this comment

BHO is no fool——he’s not going to name greenhorns to important and sensitive posts.  He needs people who know the ropes and who have learned from experience.  The age of true Republicanism, namely a laissez-faire privatized business philosophy is at its end for the next one or two generations as a more regulated economy is put in place.  Privatization of government services was a key business philosophy from the late 90’s and touted as a way to increase competition and check costs to the consumer.  To this day no one can show any benefit to the consumer from privatization——actually its just the opposite.

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By John Papola, November 19, 2008 at 3:12 pm Link to this comment

Funny, that so many people are so passionate about this economy here but nobody seems interested in the monetary policy issues at the heart of it.  Why is that?  The role of the Federal Reserve as chief supporter of the politically connected while passing inflation along to the rest of us surely must be of interest to self-described “progressives”, no?

If you don’t like corporate welfare, unjustifiable war and cronyism, your first stop should be a change in our monetary policy that funds these enterprises.  Everything else going on in Washington sits on top of this core issue.  If you can’t print money out of thin air, you can’t hand it out to your buddies in Wall Street.  If you can’t lend out money you don’t have (thanks to 100% reserve requirements), you can’t create an asset bubble.

Why is this issue ignored?

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By Xntrk, November 19, 2008 at 2:59 pm Link to this comment
(Unregistered commenter)

You are right - it takes less experience and more energy then a 40 year old can summon to mount a successful Revolution!

To much experience, and people become afraid of what they know happens to 99.9% of revolutionaries. Not enough energy, and they fall asleep on watch and let their guard down.

Fidel was 32 in 1959, Che’ was 30, and Raul a youthful 27. Fidel and Raul had been plotting and staging revolts for over 6 years without success, but learning what not to do all the time.

Che spent 1954 in Guatemala watching [and taking Guatemala’s side] in the CIA led coup against Arbenz’ fledgling Democracy. Is it any surprise that they were capable of leading a successful Rebellion against an established Thugocracy?

We [meaning my generation] believe that successful revolts are no longer possible because of the sheer power and weaponry of a modern Capitalistic regime.

Yet, in just the past 50 years, there have been many successful revolts - some engineered by the CIA, but some successful in spite of them. Iran, Poland, Cuba, Nicaragua, Chile, Venezuela, Vietnam, and others.

Perhaps we should pledge to provide clandestine help, and nothing more, to the youth who have both the courage and the idealism to find a solution to our problems, no matter what the cost.

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By yellowbird2525, November 19, 2008 at 2:51 pm Link to this comment

“change” does NOT mean the same to them; they use “keywords” to catch your attention: “progressive’ is one: it has gotten progressively worse & will continue getting worse; while y’all were watching the DNC laws were passed re water rights belong to them; laws are being ignored by our “lawmakers” in the USA, Congress, & international; & they have just declared “there is no international law” Robert Gates, head of defense. GET A CLUE! This is DICTATORSHIP & they are going for global dominion cuz “they have gotten away with it in the USA” for years now: & have the “culture” for it. THEY own the water; laws have been erased, amended, deleted “making sure the Gov isn’t implicated”; they LAUGH at the public for being so incredibly STUPID they haven’t figured it out yet! Actually SAW them LOOK at each other, roll their eyes, and say haven’t you figured out yet that we are no longer citizen run???????? and you were thinking “erroneously” that there would be a DIFFERENCE? it is: it will be far worse! REMOVING the law stating they have to list ingredients on items, guess what Pepsi & Cokes new “formula” are????? England SUED Coke over adding chemicals; (they took it off the internet); they BACKDATED the “colombia trade agreement” claiming it was signed in 2006; they LIE: & claim “aren’t you glad we are a “democracy”??? DEMOCRACY means run by the will of the people. WE are not even like ENGLAND & other places that actually have LAWMAKERS representing the PEOPLE! Like Peter Buckley St Congress (Oregon) said”: well, we got rid of the people preventing legislation from going thru, & Gov is only a tool for Businesses to tell them what to do! So the LAWS protecting the PEOPLE are GONE! laws to protect water in Oregon: gone, (expired) they said; HORSE PUCKY FOLKS! They have just named themselves ROGUE: they are a ROGUE nation, answerable to NO ONE, going into countries air spaces, on ground, like in Georgia, sending mercenaries in for them to ATTACK at THEIR (USA GOV) direction Oddessa so THEY (USA) could “claim” Russia attacked for no reason: Day of Deceit: along with many other books, documentarys, SHOW how the USA GOV set up & fed information & provocked JAPAN to deliberately attack the people of the USA in Pearl Harbor. LEARN FAST FOLKS!

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By mike montagne (PFMPE), November 19, 2008 at 1:50 pm Link to this comment
(Unregistered commenter)

It’s ridiculous to pretend we cannot solve the present problems, and solve them immediately. I provided the Reagan Administration with computer models which you can still download from our pages, which projected from 1983 numbers and expected de-escalation of interest rates, that the US “economy” would collapse, with world wide repercussions, as a consequence of perpetual, irreversible, terminal multiplication of debt, at approximately 2010 AD.

The so called NWO can be understood from the original propositions of this work (1979) to largely comprise a mere effort to retain what only amounts to a system of exploitation — not “economy.” But it is the irreversibility of the underlying process of a currency which can only multiply debt in proportion to the obligated circulation which is our problem; and the only reason we simply do not solve the problem, is that the exploiters are in charge — and their singular disposition is to preserve their system of exploitation, even if it means world-wide monetary failure under the irreversible multiplication of their exploitation.

The solution therefore is mathematically perfected economy — and I have many pages demonstrating, explaining, and validating that solution, as well as many further pages invalidating the present course, and the various other classes of contending solutions.

The ideas of mathematically perfected economy has always held sway, and has never been invalidated. But our pages are likely now the major player in true monetary reform and solution, even as the ideas have been tested by academia, and even are proven by the present model of exploitation, since they were first formally published in 1979.

One of our readers from New York this morning put his finger on this set of our pages as the material all of us need to evaluate immediately, if we are to solve this readily solved problem. He calls the following two pages a grand slam, in and of themselves demonstrating and proving performable, immediate solution, without cost:


IF I WERE PRESIDENT — How to arrest monetary failure in a day:

Lower people in the Obama Campaign became enthused to promote yours truly (an outsider) to the transition team, and at least to serve as a perpetual adviser. The folks you are rightly suspecting? They’re so afraid of the idea of mathematically perfected economy, they dare not even respond to it. All my attempts to communicate with the Obama Campaign since September 29, have been simply cut off.

When you have a true solution and the preferable path to serve the people, you do have a superior argument (instead of evasion), don’t you?

Just something to think about as the nature of an imposed, privatized currency plunges us ever deeper into insoluble, terminal debt.

mike montagne — founder, PEOPLE For Mathematically Perfected Economy

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By Naz, November 19, 2008 at 1:46 pm Link to this comment

When is SOMEONE going to change from using the term “bailout” to using “handout” because that’s what they are doing with the money. And what in hell did anyone expect? Politicians are kept in office to deregulate the system with money from the white collar thieves. When the thieves’ looting becomes a problem, they turn to the politicians they keep in office who in turn loot the taxpayers for their benefactors. All the rest is a dog and pony show.

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By Bboy57, November 19, 2008 at 1:36 pm Link to this comment

Td- You mind telling me why you just censored me?

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By blog dog, November 19, 2008 at 12:26 pm Link to this comment
(Unregistered commenter)

RE: arguments favoring “free markets”

Such arguments are based on the false premise that there ever was such a thing as a “free market” - political intervention in commerce is eternal and inevitable, even down to the organizational level of the family. Crony Capitalism is the only flavor it comes in. The argument ultimately boils down to whether it goes down any easier than Politically Correct Socialism.

The only fair solution is fair regulation by rule of law, with all the democratic due diligence and civic virtue that entails.  As the salty skipper in Lothar-Günter Buchheim’s harrowing novel, Das Boot, pointedly surmises: “Sie müssen haben gootes Menschen.”

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By leftyrite, November 19, 2008 at 12:22 pm Link to this comment

Brook Born for Treasury Secretary.

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By Samson, November 19, 2008 at 12:12 pm Link to this comment

There is of course nothing surprising to this.  If you want to know why Ms. Bair isn’t Sec of Treas, ask this question?  How much did she contribute to the Dems?  Goldman Sachs and Wall St in general were Obama’s biggest contributors.  Thus, it was obvious that exactly this was going to happen after the election.

There were progressives who were dreaming before the election that Obama would be a secret revolutionary progressive and that he would stiff his big contributors.  That always seemed unlikely to me, and it clearly isn’t happening.

What to do?  In 2010 mount a major 3rd Party/Independent campaign that directly targets the races where the Democrats are in close races.  The goal is to threaten the Dems with the loss of enough seats in the Senate and the House to lose their majority.  Don’t play in ‘safe’ districts.  Go right after the close ones where we can make them lose.

Politics is about power.  We have to show we have political power.  With the last election, and the meek progressives lining up to vote for Goldman Sachs to run the economy, we showed zero political power.  Until we show real political power, we will continue to be ignored.  Threaten the Dems with losing races and their majority, and then we’ll stop being ignored.

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By Folktruther, November 19, 2008 at 11:29 am Link to this comment

I agree, Troublesum.  But you notice as Obiden goes to the right, Scheer and other progressives go to the left.  Obama is betting that progressives cannot organize themselves well enough to cost him the next election.  Aad it’s not a bad bet.

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By troublesum, November 19, 2008 at 11:16 am Link to this comment

I think that if Obama is spoiling for a fight with progressives they should take him up on it, not sit there with their thumbs up their asses saying “let’s wait and see.”

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By Bill473, November 19, 2008 at 11:05 am Link to this comment
(Unregistered commenter)

There’s much on Obama that few know:

and apparently he will soon be disqualified as president elect:

but then so would McCain have been (NY Times):

also similar -

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By Hulk2008, November 19, 2008 at 11:00 am Link to this comment
(Unregistered commenter)

We can hope that Barack and friends have observed the sins of the past and have learned from them.  Maybe Messrs. Summers and Rubin are contrite and have pulled back from their earlier faux pas - we can hope for that, right?  My own read on the Pres-Elect is that he is fairly cautious and studies details.  There is virtue in redemption - isn’t his recent offering as the new Atty. General evidence of that?  Of course, we all could have voted for McCain-Palin -  now that would have been “real change” and being “mavericky”, right ?  (Heaven forbid.) 
  Maybe there IS no easy solution to all the financial grief; people tend to recreate structures similar to what they had in the past - otherwise the ancient Greeks and the world they conquered would have been a permanent democracy.  History proves one thing about “progress”:  two step forwards and one step back is a lot to hope for.  Greed, racial bias, xenophobia, superstition, ignorance still persist in all directions and places. 
    Jesus said “The poor will be with us always.”; don’t forget his allusion to the rich being as unable to shed their greed as a camel entering the eye of a needle (tiniest gate of a walled city).  Maybe HE meant ALL of us would be “poor” forever.
  Relish the best we can get at this time - Heaven is someplace ELSE.

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By mud, November 19, 2008 at 10:36 am Link to this comment

Paulson repeating the claim that this whole mess was caused by foolish home buyers is especially galling.

The mess is a direct result of the rampant, out of control, multi trillion dollar derivatives ponzi scheme Mr. Paulson worked so hard to create.

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By nrobi, November 19, 2008 at 10:35 am Link to this comment

Mr. Scheer, how prescient of you! To determine that of all people Lawrence Summers, and Robert Rubin, both members of the “Free Trade and Total Deregulation,” club would be considered for the spot of Secretary of the Treasury is abominable and furthermore, something that would cause even worse economic disaster and thievery by the Wall Street Thugs.
Many members of the Wall Street Thugs, including Henry (Hank with a gun in his hand)Paulson, have ruined this strong and robust economy with their schemes of deregulation and less and less oversight of the markets.
My idea for the whole lot of them would be to throw them to the wolves and let the chips fall where they may. These Wall Street Thugs have created this global economic meltdown with their ever-increasingly exotic and unfathomable derivative markets that only cost the people money, but line the pockets of those selling them.
With the downfall of the speculation banks, we did not need to bail them out, but now with the Treasury Department backing the “stronger” banks, capitalizing banks such as PNC of Pittsburgh, Pa. we are now faced with stronger by dint of this insane capitalization scheme thought of by the government and we are now losing many small to medium banks that were not in trouble, and which could have withstood the tide of deregulation.
The government has truly interfered in the marketplace and made a complete disaster of the banking sector of our economy. We, the people are now faced with the uncertainty of, if our bank will be one of the ones thought of as under-capitalized by the Fed and the Treasury.
The money being touted as “bailout,” is in all actuality being used to buy banks that are not going along with these insane schemes. Predatory buying is now the watchword of the day and this is being financed by the government of the shrub, and should Barack Obama, continue with these policies, it is a certainty that we will have more of the same.

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By John Papola, November 19, 2008 at 10:13 am Link to this comment


I am a religious listener to LRC and a new registrant to your site, but as someone working to educate myself in economic issues (on the side) amid this chaos, I find your certitude about the cause-and-effects of our current situation to stand in opposition to your intelligence.  As a libertarian-minded person (I prefer Classical Liberal), I find myself agreeing with you probably 30% of the time.  But the hubris in your certitude here is troubling.

There are many reasonable competing theories for the proportion of blame each element of this financial meltdown deserves.  The most intellectually honest approach would appear to require one lay out as many of the parameters as possible and study them all with an open mind.

You, however, have already cast judgement.  The root cause is Phil Gramm and these liberalizing finance deregulations almost solely.  For you, it seems “Regulation is good, de-regulation is bad”. Where you fail in my opinion is that you don’t (or not often enough) articulate the connection between these various instruments of securitization and insurance to how they really impacted the “crisis”.  They masked the systemic risk and spread it around the system.  Sure.  But were they the PRIMARY cause of the housing bubble?  That sustained bubble is, in my opinion, the REAL cause for this crisis and the real environment that enabled banks to feel so cavalier.  The risk of foreclosure becomes less problematic in the face of ongoing housing price increases, hence one justification for the taking of more risk.

So determining the primary causes of the bubble are the key… and it’s impossible to overlook the enormous role in the Federal Reserves credit expansion and interest rate price fixing between 2001 and 2004.  This is your great blind spot and your seemingly willful ignorance of the issue makes your arguments feel much more ideological than journalistic or empirical.  The right has already covered the Fannie and Freddie angle to death, but it’s fair to say there’s merit in those issues too. 

I’m all for a different banking model, but not one built around central planning and regulation as you are advocating.  That is just a tweak to our current system.  I believe that this crisis points toward the need for an end to fractional banking and a return to the prudence that hard money requires.  The problem you may have with this is that it will starve our profligate state of the means to wildly deficit spend on unsustainable entitlements.  But, maybe not.  I’d love to hear your thoughts on the matter.  Monetary Inflation amounts to a punishing tax on the poor and transfer of wealth to the politically connected, so I consider my position a very populist one.  This crisis is a monetary one above all else, from what I can see, NOT strictly a “de-regulation” crisis.  That is a bandaid on a fundamentally unsound system of fractional banking. 

You have, in my opinion, been very lazy on the empirical work necessary to back up your certitude in your causal analysis.  Provide the full richness of exploration in the issue instead of seeking confirmation of an ideological position (debunking the “Reagan Revolution” of “Radical de-regulation”).  Spend a little more time working with falsification as a guide instead of confirmation and it will serve you well.  Test your theory with evidence. 

Most of all, have some humility about the immense complexity of our economy and anyone’s ability to know cause-and-effects and opportunity costs in the absolute.

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By P. T., November 19, 2008 at 10:05 am Link to this comment

Lawrence Summers was Treasury Secretary in the Clinton administration.  If he’s a known misogynist, what does that make the Clintons?

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By Fadel Abdallah, November 19, 2008 at 9:22 am Link to this comment
(Unregistered commenter)

Thank you Robert Scheer for shedding more light on issues of concern regarding the wrong direction Obama’s administration is heading.

I am sorry to say that for a real change to take place, we must not trust any politician or economist who is over forty years old. I have college students who are not majoring in economics or politics, yet they have more common sense than all those so-called veteran politicians and economists. I truly believe that all those guys are and will always be part of the problem and not the solution. It’s about time to explode the myth of experienced politicians and economists who will fix the problems. We need a whole breed of politicians and economists who are not stuck in the past mentality of business as usual and they must be less than forty years old, for I am convinced now not to trust, as an agent of change for the better, any one who is over forty.

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By Anarcissie, November 19, 2008 at 9:15 am Link to this comment

I’m glad to hear Representative Maloney is awake.  She is my Congressional representative, and during the Bailout debate I wrote her a nice, well-reasoned message as to why the Bailout constituted theft and chicanery.  She voted for it anyway, of course.  But now she’s awake; thank God for small blessings.

Summers is pretty revolting, but Mr. O has never given any evidence he is anything but old school tie and all that, and I guess we will have to put up with Summers at least until the next catastrophe.

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By mud, November 19, 2008 at 8:41 am Link to this comment

“This is not change we can believe in.”

No, because this is not change.

Hope we weren’t holding our breath.

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