Tag Archive | "recession"

Will capitalism solve its crisis with more wars?

Dave Riley responds to our ‘Dr. Doom’ Roubini. ‘Karl Marx was right‘ post (promoted from the comments).

We are not so fortunate that the wagon will fall over all by itself as the key question is what is it that it can be so destructive? But herein lies the bare bones of a solution — like an old penny: if there is excess capacity, destroy it and built it up again and/or create new aggregate demands.


Welcome to World War II –the means by which capitalism saved itself from the self-destruction long wave of the Great Depression. Maybe it costed a few tens of million dead and maybe capitalism lost markets big time as large portions of the planet went soviet style, but the post war boom merely confirmed the wisdom of the 1939-1945 entrepreneurial enterprise as a ‘solution’.

Good times were to had this side of the slaughter.

The problem is: what now? As the populace gets testy and angsty do we have to put up with another round of fascism so the feral masses are kept in check? Is there any capacity on hand worth the destruction? Laying to waste the infrastructure of Iraq is small potatoes compared to the great European and Pacific wars. And no Marshall Plan is on offer for Baghdad’s high rollers…

So the irony is that despite laissez-faire neo-liberal capitalist groupthink the most reliable solution is a state bail out assuming the state is still rich enough still to do it.

What a contradiction!

The irony is that if there weren’t so many ideological constraints — funding a war footing shift to a sustainable economy based on renewables is a short-term panacea as that would suck up capacity and extend markets in a similar way to the state-run infrastructure programs of the thirties…as did the Second World War.

Outline (albeit a little dated),

The problem is that when capitalism is in deep shit crisis things get desperate and so do the solutions: fascism, war….barbarism. But you need to recognize that this crisis set in in 1974 and today’s mess is but one symptom of the failure to solve the underlying problem that set in 40 years ago during this current economic wave. Despite the driving down of wages and the looting of the capitalist states; deflector military spending and the collapse of the Soviet Union…all we have had is band-aid measures.

I blog about California renewable energy at CAIVN and it’s clear that the California government sees renewable energy and cleantech as the primary way to revitalize their economy. I’m not so optimistic. As Dave points out using other examples, the money to do so just isn’t there. That’s the huge difference between WWII and now. The US came out of the war with a booming economy, make even more powerful by being paid to rebuild in Germany what it had just bombed. But the wars now have had the opposite effect. The economy is weak and getting weaker. Could a massive push nationally towards renewables transform the economy? It would certainly help. But we need jobs in many more areas besides renewables, a sector which is still comparatively small and which requires serious technical chops and skills for most jobs.

It’s those band-aid measures that are the problem. The elites have mostly abdicated any responsibility for society at large. The result is hollowed-out governments with no real direction.

So, if we can’t get out of our economic malaise by war or a switch to renewables, then how will we do it?

Posted in Energy

Housing is double dipping

And this chart was before foreclosuregate

Zillow – a real estate cheerleader if there ever was one – is now predicting an “unprecedented decline” worse than the Great Depression

Meanwhile, the Obama Administration continues to send billions to Wall Street while doing little to help Main Street or homeowners and seems asleep at the wheel on foreclosuregate.

Posted in News

Both parties are complicit in our economic collapse

No, that can’t be, some say. The recession is clearly all the fault of the other political party. They are the evildoers. We are the good guys. Actually, no. When it comes to our economic crisis, which was triggered by the cratering of the subprime market, both parties share much blame. The policies and actions of both parties, along with their deep coziness with the financial sector, created a bubble that was destined to explode. Garbage securities were sold with no accountability or regulatory oversight. Long-standing laws limiting bank power were repealed. Federal entities guaranteed mortgages that should never have been issued. And now, with the foreclosure debacle upon us, it’s clear that fraud and corruption are rampant.

Regulatory agencies were gutted and rendered as ineffective as possible under both Bush Administrations. They cut budgets so the agencies would be understaffed and made it clear that ambitious prosecutions would not be welcome. This was done in the Randian belief that markets, if only left alone by an interfering government, would regulate themselves. Can we please throw this bizarre belief in the scrap heap of history? Markets, if left alone, do not play nice. Rather, they turn into pirates. The events of the past few years conclusively demonstrate this.

Under Clinton, the Department of Housing and Urban Development undertook to increase home ownership from 60% to 70%. Subprime mortgages were the vehicle for this (by a bizarre coincidence, these were also the mortgages that Wall Street made the most money from.) Fannie Mae and Freddie Mac backstopped the mortgages by guaranteeing them. Clinton cheerfully presided over repeal of the Glass-Steagall Act, a law which had been in effect since the 1930’s and which prevented certain types of bank mergers. These two actions led directly to the creation of the subprime bubble.

The floodgates opened. All manner of NINJA (No Income, No Job, and No Assets) mortgages went flying through the system, were bundled together and securitized. Wall Street made billions. Since the regulatory agencies were snoozing, no one cared much that the foundation for all of this, subprime mortgages, was made of sand.

Financial bloggers like Calculated Risk and Mish were way ahead of the mainstream media and the government on predicting the collapse of subprime. They were early and right. Subprime imploded and took the economy with it. The states where the real estate bubble was the most extreme, like California. have suffered the worst, with high unemployment and foreclosure rates.

Obama was backed early and with huge contributions by Wall Street. He was their guy. Hillary was too independent for them. McCain thought them to be “spoiled brats and ruthless opportunists” who would take bailout money, keep it, and then pay themselves huge bonuses. (He was right.)  This is from Charles Gasparino’s new book Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street.,He details the decades-long alliances of both parties with Wall Street. And if you’re a liberal who thinks the book must be suspect because Gasparino is a conservative, then you don’t get the point. Both parties are culpable.

Obama had no such qualms about with Wall Street. He told them their mortgages were swell and then, after the economy collapsed, asked them for advice on how to fix it. Did he understand he was asking the architects of the disaster how to rebuild what they previously destroyed? Apparently not, because he bought several of them, Geithner and Summers among them, into his administration. Obama also allowed accounting rules to be neutered so banks no longer had to mark-to-market. They instead are now permitted to price their holdings as they deem fit. They then book illusory profits and pay themselves more huge bonuses. You and I have to mark-to-market. The big banks don’t.

The financial blog Zero Hedge has done a superb job of exposing financial fraud and criminality. They say The fraud started at the very top: With government leaders of both parties. So, what do we do? Yelling that the other side is to blame is pointless and self-defeating. Instead, citizens on all sides of the political spectrum can educate themselves on these issues, insure that the issues stay in the public spotlight, organize in their geographical areas, and then maybe gain real political power. This is precisely what the Populist Party did in the 1890’s. They were farmers who were losing their farms to predatory banks and being gouged by crop speculators. They joined together to form co-ops to buy their goods at a fair price, and then became a national force. The trust-busting of Teddy Roosevelt was certainly influenced by the populists.

We’re seeing an upsurge of populism now. As far as I’m concerned, bring it on. Because something needs to be done.

(Crossposted from CAIVN)

Posted in News

Impeach Bernanke. Now

This is from Karl Denninger. He co-founded the Tea Party specifically in opposition to the theft of taxpayer money to bail out failed companies and recently blasted its current incarnation as being about “the usual pablum. Guns, gays, God” and not about the economic crisis.

The Tea Party was initiated as a political protest against the unlawful and in fact unconstitutional usurpation of power from the Congress and The People in the form of extortion-led bailouts of enterprises that had engaged in acts that I, and many others, believe were at least civilly actionable and in many cases crossed the line into criminal activity.

Many of those brought on or kept on by the Obama Administration to get us out of the economic crisis are precisely the same people who created it. Worse, it’s obvious that massive fraud and criminality were rampant but the government still has made no criminal indictments, which is appalling.

Posted in Banksters, News

Taiwan totally gets it about the banksters

In this amusing animation, New Media Animation in Taiwan demonstrates how the investment banks plundered America with willing help from politicians. With English subtitles.

Posted in Banksters, News

Obama’s rise was funded and helped by investment banks

Maureen Dowd ponders the sinking Obama presidency, wondering what happened, not really understanding that Obama became president with huge help from investment banks. My view, Obama just isn’t that concerned with the rest of us.

After two years of taking his base for granted, the former Pied Piper of America’s youth had to spar with Jon Stewart to try to get the attention of young people who once idolized him.

With his coalition and governing majority shattering around him, President Obama will have to summon political skills — starting Wednesday — that he has not yet shown he has.

Oh, he has the skills, and it’s not so much that he’s detached or elitist but rather that he is beholden to and a creature of the investment banks who aided his rise to the presidency.

In Bought and Paid For. The Unholy Alliance between Obama and Wall Street, Charles Gasparino documents how Obama was backed early and heavily by investment banks. They saw Hillary as too independent and OMG, she actually would criticize them, can’t have that happening. McCain thought the banksters were “spoiled brats and ruthless opportunists” who would keep the bailout money then pay themselves big bonuses. Look, he would have been a disaster as president but on this he was completely correct. But Obama had no such qualms and made a point of cozying up to bankers, commenting about how wonderful all their mortgages were and how they give a real service to the rest of us. He also asked them for advice on how they would fix the mess they made (gosh, what a fine idea that is) then hired the primary architects of our economic crisis to repair the damage they made. Wall Street showered him with many millions early on, way more than they had ever given to a candidate. Obama amply rewarded them with hundreds of billions in taxpayer money then made sure the accounting rules got changed so they could mark-to-whatever and not mark-to-market.

Yes, Gasparino is right-wing. But his primary point is the economic crisis is as much the fault of federal government policies as it is of the banks. The government continues to give them almost free money in the form of miniscule interest rates. Then banks use the money to buy treasuries or speculate. Very little of it ends up helping Main Street. This is hardly accidental.

To paraphrase Malcolm X in a different context, we’ve been hoodwinked, we’ve been bamboozled.

And if you think maybe Gasparino is suspect because he’s a conservative (I don’t), here’s liberal James Kunstler saying much the same thing, in his post on the mid-term elections.

The President and his Democrats may have inherited this clusterfuck from the feckless George Bush but they flubbed every chance to mitigate any part of it, ranging from their failure to restore the rule of law in banking (by prosecuting the executives of major banks who oversaw the systematic swindle), to mis-directing our dwindling resources toward ends (such as “shovel-ready” new super-highways) that won’t promote a credible future for this society, to misleading the public in the fantasy that alt-energy will offset the disruptions of peak oil (and allow us to keep running suburbia, the US Military, and WalMart by other means).

It’s really too late for both parties. They’re unreformable. They’ve squandered their legitimacy just as the US enters the fat heart of the long emergency. Neither of them have a plan, or even a single idea that isn’t a dodge or a grift. Both parties tout a “recovery” that is just a cover story for accounting chicanery and statistical lies aimed at concealing the criminally-engineered national bankruptcy that they presided over in split shifts. Both parties are overwhelmingly made up of bagmen for the companies that looted America.

Posted in Banksters, News

Michael Moore: Looking for the pixie dust

I call it Progressive’s Pixie Dust Syndrome, the belief that if progressives can just convince Obama to do the right thing, then he will! Pixie dust will then be spread across the land and all will be well, as errant Dems come to their senses and we all sing “Cumbaya” together. Sadly, Michael Moore has an extremely serious case of PPDS as witness his How Democrats can avoid catastrophe in November.

If you’re of a mindset that believes a return to 2001-2008 would be sheer insanity, then you probably agree we’ve got no choice but to save the Democrats from themselves.

Not without a price tag. Not without forcing concessions from the Obama Administration. Otherwise you’re just a chump and they know they can punch you and you’ll do nothing. (Just like what congressional Republicans are doing to their Democratic counterparts.)

He then posits 5 things Dems can do to get that pixie dust here ASAP. However, none of them have the slightest chance of happening. Plus, his first choice shows his ignorance of the current financial crisis and how it was caused.

1. Immediate wall-to-wall tv ads, internet videos, and appearances hammering who the hell put us in the misery we’re in.

Bush and Co. also caused the biggest collapse of our economy since the Great Depression.

This is patently false. Bush & Co. played a part in it, sure. So did Bill Clinton as president when he cheerfully aided and abetted in the repeal of Glass-Steagall, which deregulated the banking industry and directly led to the crisis. Both parties have plenty of blood on their hands here, are beholden to Wall Street money, and have gutted the regulatory agencies. Obama has given hundreds of billions to the banksters, allowed accounting regulations to be further gutted, all for bankster’s gain and to the detriment of the rest of us. To think he will magically reverse course now is delusion.

Sorry Michael, the pixie dust just ain’t going to happen. Our problems are systemic, deep-rooted, and both parties are complicit.

Posted in News

The Valkyrie of financial analysts slams California as the worst

Meredith Whitney says the appalling fiscal condition of many states is a systemic risk to the country, with California being the worst. The similarity between the states and the banks is clear; off balance sheet coverage, over-leveraging, borrowing against future dollars to pay bills now, etc. Texas is by far the healthiest with low spending, solvent public pension funds, and more.

And virtually no politician at the national level is talking about this. Oh, they will squeal, just like they did with the banking meltdown, who could have seen it coming. Pathetic. Basically, we do not have leaders in this country. And we need some. Now.

Wikipedia. Valkyrie. “one of a host of female figures who decide who will die in battle.”

Posted in News

Aftershock: The Next Economy and America’s Future

Robert Reich on his new book.

The problems are structural, he say, with the biggest problem being the growing disparity of wealth. The upper 1% in the US got 27% of income in 2007. This leaves much less for the middle class. We will either have reform or reactionary politics which turns us against each other and the world

Posted in News

Escaping double dip to growth recession means no job relief

Translation: The Fed will continue coddle Wall Street at the expense of the rest of us. They plan to buy assets in hopes that will make dividend stocks more attractive, a singularly useless approach to helping the economy in the real world. Apparently they’ve forgotten or are unconcerned about unemployment. Of course, big business likes high unemployment, that way they can pay less and push workers harder.

“You need not go farther than one of our stores on midnight at the end of the month,” [Wal-Mart CEO] Simon said. “About 11 p.m. customers start to come in and shop, fill their grocery basket with basic items — baby formula, milk, bread, eggs — and continue to shop and mill about the store until midnight when government electronic benefits cards get activated, and then the checkout starts.”

Think about that. Desperate families on the edge while the Fed dreams up ways to make dividend stocks a better buy for Wall Street.

Posted in News


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