BS: Crash of U.S. Economy

Subject: RE: BS: Crash of U.S. Economy
From: autolycus
Date: 11 Jan 08 - 04:28 AM

The thing to do is for Americans to retire to Mexico?

But surely there's only one place for them to retire to.

Ivor

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 11 Jan 08 - 12:33 PM

Anyway, everything is all right now; the Bank of America is buying out Countrywide.

Subject: RE: BS: Crash of U.S. Economy
From: Peter K (Fionn)
Date: 22 Jan 08 - 12:19 PM

Look out!!! The sky is falling. - DougR, 10 August 2007.

Interesting to read in the Economist that the Chinese economy could still grow at better than eight per cent without selling into the US market. Anyone who still doubts that this is Asia's century is living in cloud cuckoo land.

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 22 Jan 08 - 12:45 PM

I wonder what they'll do for water?

Subject: RE: BS: Crash of U.S. Economy
From: Kent Davis
Date: 23 Jan 08 - 12:21 AM

CaroleC,

You said that, in my November 14, I was "using a definition of 'Third World country' that [I] have created in [my]own mind..." That was certainly not my intention. I was using the term "Third World" to refer to countries such as Bolivia, Kenya, Guinea, and Cambodia. Obviously I need to learn a new definition. Where did you find yours?   
I have learned so much from your posts. You mentioned that "One of the criteria for Third World status is dependence upon exportation of primary products to other countries in return for finished products." That would be countries like Bahrain, Qatar, Saudi Arabia, Kuwait, and the United Arab Emirates, wouldn't it?
You also mentioned, "Another criteria is the degree of disparity between rich and poor." I never knew it was the degree of DISPARITY that made the difference! I always thought it was the degree of POVERTY! In your June 17 post you said, "We are supposedly the wealthiest nation on the earth and we're two categories behind India when it comes to equitable distribution of wealth. We have become a Third World nation."   
I looked back at the graphic you referred to then. Imagine my surprise when I saw that Canada and Ethiopia are in the same category when it comes to equitable distribution of wealth. Does this mean that Ethiopia is a "First World" country? Or is Canada a "Third World" country? Then I noticed that Rwanda and Uzbekistan are in the same category as Germany and Sweden. Their wealth is distributed MORE equitably Ireland's, the UK's, Switzerland's, or Italy's. So is Rwanda a "First World" country? Is Switzerland a "Third World" country?
Also you mentioned, "Another attribute that is common with Third World countries is enormous debt. When a massive amount of a country's GDP is devoted to servicing its debt, that country is generally to be found in the Third World." The U.S. Federal Public Debt, as a percentage of GNP, is currently about what it was in the early 1940s, the middle 1950s, the early 1990s, and the late 1990s. It was much lower in the early thirties, the late 60s, and the early 70s. So, if I understand you correctly, the U.S. was a "First World" country before the New Deal started, and also during the Nixon-Ford years, but has been a "Third World" country since about 1993. Is that it?
Thank you so much for your help.   

Kent

Subject: RE: BS: Crash of U.S. Economy
From: CarolC
Date: 23 Jan 08 - 02:20 AM

Interesting post, Kent. Let me reflect on it a bit before I answer.

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 23 Jan 08 - 09:02 AM

"...the U.S. was a "First World" country before the New Deal started, and also during the Nixon-Ford years, but has been a "Third World" country since about 1993. Is that it?..."

                  Actually, the US was a first world country right up to the point that Ronald Reagan submitted his first budget to Congress, it begain the slide to third world status shortly after that.

Subject: RE: BS: Crash of U.S. Economy
From: GUEST,ALCAN1
Date: 23 Jan 08 - 09:26 AM

None of you people know US economic history. Here is an overview of it and where we are headed.

Before the US House of Representatives, February 15, 2006

A hundred years ago it was called "dollar diplomacy." After World War II, and especially after the fall of the Soviet Union in 1989, that policy evolved into "dollar hegemony." But after all these many years of great success, our dollar dominance is coming to an end.

It has been said, rightly, that he who holds the gold makes the rules. In earlier times it was readily accepted that fair and honest trade required an exchange for something of real value.

First it was simply barter of goods. Then it was discovered that gold held a universal attraction, and was a convenient substitute for more cumbersome barter transactions. Not only did gold facilitate exchange of goods and services, it served as a store of value for those who wanted to save for a rainy day.

Though money developed naturally in the marketplace, as governments grew in power they assumed monopoly control over money. Sometimes governments succeeded in guaranteeing the quality and purity of gold, but in time governments learned to outspend their revenues. New or higher taxes always incurred the disapproval of the people, so it wasn't long before Kings and Caesars learned how to inflate their currencies by reducing the amount of gold in each coin – always hoping their subjects wouldn't discover the fraud. But the people always did, and they strenuously objected.

This helped pressure leaders to seek more gold by conquering other nations. The people became accustomed to living beyond their means, and enjoyed the circuses and bread. Financing extravagances by conquering foreign lands seemed a logical alternative to working harder and producing more. Besides, conquering nations not only brought home gold, they brought home slaves as well. Taxing the people in conquered territories also provided an incentive to build empires. This system of government worked well for a while, but the moral decline of the people led to an unwillingness to produce for themselves. There was a limit to the number of countries that could be sacked for their wealth, and this always brought empires to an end. When gold no longer could be obtained, their military might crumbled. In those days those who held the gold truly wrote the rules and lived well.

That general rule has held fast throughout the ages. When gold was used, and the rules protected honest commerce, productive nations thrived. Whenever wealthy nations – those with powerful armies and gold – strived only for empire and easy fortunes to support welfare at home, those nations failed.

Today the principles are the same, but the process is quite different. Gold no longer is the currency of the realm; paper is. The truth now is: "He who prints the money makes the rules" – at least for the time being. Although gold is not used, the goals are the same: compel foreign countries to produce and subsidize the country with military superiority and control over the monetary printing presses.

Since printing paper money is nothing short of counterfeiting, the issuer of the international currency must always be the country with the military might to guarantee control over the system. This magnificent scheme seems the perfect system for obtaining perpetual wealth for the country that issues the de facto world currency. The one problem, however, is that such a system destroys the character of the counterfeiting nation's people – just as was the case when gold was the currency and it was obtained by conquering other nations. And this destroys the incentive to save and produce, while encouraging debt and runaway welfare.

The pressure at home to inflate the currency comes from the corporate welfare recipients, as well as those who demand handouts as compensation for their needs and perceived injuries by others. In both cases personal responsibility for one's actions is rejected.

When paper money is rejected, or when gold runs out, wealth and political stability are lost. The country then must go from living beyond its means to living beneath its means, until the economic and political systems adjust to the new rules – rules no longer written by those who ran the now defunct printing press.

"Dollar Diplomacy," a policy instituted by William Howard Taft and his Secretary of State Philander C. Knox, was designed to enhance U.S. commercial investments in Latin America and the Far East. McKinley concocted a war against Spain in 1898, and (Teddy) Roosevelt's corollary to the Monroe Doctrine preceded Taft's aggressive approach to using the U.S. dollar and diplomatic influence to secure U.S. investments abroad. This earned the popular title of "Dollar Diplomacy." The significance of Roosevelt's change was that our intervention now could be justified by the mere "appearance" that a country of interest to us was politically or fiscally vulnerable to European control. Not only did we claim a right, but even an official U.S. government "obligation" to protect our commercial interests from Europeans.

This new policy came on the heels of the "gunboat" diplomacy of the late 19th century, and it meant we could buy influence before resorting to the threat of force. By the time the "dollar diplomacy" of William Howard Taft was clearly articulated, the seeds of American empire were planted. And they were destined to grow in the fertile political soil of a country that lost its love and respect for the republic bequeathed to us by the authors of the Constitution. And indeed they did. It wasn't too long before dollar "diplomacy" became dollar "hegemony" in the second half of the 20th century.

This transition only could have occurred with a dramatic change in monetary policy and the nature of the dollar itself.

Congress created the Federal Reserve System in 1913. Between then and 1971 the principle of sound money was systematically undermined. Between 1913 and 1971, the Federal Reserve found it much easier to expand the money supply at will for financing war or manipulating the economy with little resistance from Congress – while benefiting the special interests that influence government.

Dollar dominance got a huge boost after World War II. We were spared the destruction that so many other nations suffered, and our coffers were filled with the world's gold. But the world chose not to return to the discipline of the gold standard, and the politicians applauded. Printing money to pay the bills was a lot more popular than taxing or restraining unnecessary spending. In spite of the short-term benefits, imbalances were institutionalized for decades to come.

The 1944 Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, replacing the British pound. Due to our political and military muscle, and because we had a huge amount of physical gold, the world readily accepted our dollar (defined as 1/35th of an ounce of gold) as the world's reserve currency. The dollar was said to be "as good as gold," and convertible to all foreign central banks at that rate. For American citizens, however, it remained illegal to own. This was a gold-exchange standard that from inception was doomed to fail.

The U.S. did exactly what many predicted she would do. She printed more dollars for which there was no gold backing. But the world was content to accept those dollars for more than 25 years with little question – until the French and others in the late 1960s demanded we fulfill our promise to pay one ounce of gold for each $35 they delivered to the U.S. Treasury. This resulted in a huge gold drain that brought an end to a very poorly devised pseudo-gold standard.

It all ended on August 15, 1971, when Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold. In essence, we declared our insolvency and everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it – not even a pretense of gold convertibility, none whatsoever! Though the new policy was even more deeply flawed, it nevertheless opened the door for dollar hegemony to spread.

Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence "backed" the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971. Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo–gold standard under Bretton Woods. It certainly was less stable than the gold standard of the late 19th century.

During the 1970s the dollar nearly collapsed, as oil prices surged and gold skyrocketed to $800 an ounce. By 1979 interest rates of 21% were required to rescue the system. The pressure on the dollar in the 1970s, in spite of the benefits accrued to it, reflected reckless budget deficits and monetary inflation during the 1960s. The markets were not fooled by LBJ's claim that we could afford both "guns and butter."

Once again the dollar was rescued, and this ushered in the age of true dollar hegemony lasting from the early 1980s to the present. With tremendous cooperation coming from the central banks and international commercial banks, the dollar was accepted as if it were gold.

Fed Chair Alan Greenspan, on several occasions before the House Banking Committee, answered my challenges to him about his previously held favorable views on gold by claiming that he and other central bankers had gotten paper money – i.e. the dollar system – to respond as if it were gold. Each time I strongly disagreed, and pointed out that if they had achieved such a feat they would have defied centuries of economic history regarding the need for money to be something of real value. He smugly and confidently concurred with this.

In recent years central banks and various financial institutions, all with vested interests in maintaining a workable fiat dollar standard, were not secretive about selling and loaning large amounts of gold to the market even while decreasing gold prices raised serious questions about the wisdom of such a policy. They never admitted to gold price fixing, but the evidence is abundant that they believed if the gold price fell it would convey a sense of confidence to the market, confidence that they indeed had achieved amazing success in turning paper into gold.

Increasing gold prices historically are viewed as an indicator of distrust in paper currency. This recent effort was not a whole lot different than the U.S. Treasury selling gold at $35 an ounce in the 1960s, in an attempt to convince the world the dollar was sound and as good as gold. Even during the Depression, one of Roosevelt's first acts was to remove free market gold pricing as an indication of a flawed monetary system by making it illegal for American citizens to own gold. Economic law eventually limited that effort, as it did in the early 1970s when our Treasury and the IMF tried to fix the price of gold by dumping tons into the market to dampen the enthusiasm of those seeking a safe haven for a falling dollar after gold ownership was re-legalized.

Once again the effort between 1980 and 2000 to fool the market as to the true value of the dollar proved unsuccessful. In the past 5 years the dollar has been devalued in terms of gold by more than 50%. You just can't fool all the people all the time, even with the power of the mighty printing press and money creating system of the Federal Reserve.

Even with all the shortcomings of the fiat monetary system, dollar influence thrived. The results seemed beneficial, but gross distortions built into the system remained. And true to form, Washington politicians are only too anxious to solve the problems cropping up with window dressing, while failing to understand and deal with the underlying flawed policy. Protectionism, fixing exchange rates, punitive tariffs, politically motivated sanctions, corporate subsidies, international trade management, price controls, interest rate and wage controls, super-nationalist sentiments, threats of force, and even war are resorted to – all to solve the problems artificially created by deeply flawed monetary and economic systems.

In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency. In this case that's the United States. As long as foreign countries take our dollars in return for real goods, we come out ahead. This is a benefit many in Congress fail to recognize, as they bash China for maintaining a positive trade balance with us. But this leads to a loss of manufacturing jobs to overseas markets, as we become more dependent on others and less self-sufficient. Foreign countries accumulate our dollars due to their high savings rates, and graciously loan them back to us at low interest rates to finance our excessive consumption.

It sounds like a great deal for everyone, except the time will come when our dollars – due to their depreciation – will be received less enthusiastically or even be rejected by foreign countries. That could create a whole new ballgame and force us to pay a price for living beyond our means and our production. The shift in sentiment regarding the dollar has already started, but the worst is yet to come.

The agreement with OPEC in the 1970s to price oil in dollars has provided tremendous artificial strength to the dollar as the preeminent reserve currency. This has created a universal demand for the dollar, and soaks up the huge number of new dollars generated each year. Last year alone M3 increased over $700 billion.

The artificial demand for our dollar, along with our military might, places us in the unique position to "rule" the world without productive work or savings, and without limits on consumer spending or deficits. The problem is, it can't last.

Price inflation is raising its ugly head, and the NASDAQ bubble – generated by easy money – has burst. The housing bubble likewise created is deflating. Gold prices have doubled, and federal spending is out of sight with zero political will to rein it in. The trade deficit last year was over $728 billion. A $2 trillion war is raging, and plans are being laid to expand the war into Iran and possibly Syria. The only restraining force will be the world's rejection of the dollar. It's bound to come and create conditions worse than 1979–1980, which required 21% interest rates to correct. But everything possible will be done to protect the dollar in the meantime. We have a shared interest with those who hold our dollars to keep the whole charade going.

Greenspan, in his first speech after leaving the Fed, said that gold prices were up because of concern about terrorism, and not because of monetary concerns or because he created too many dollars during his tenure. Gold has to be discredited and the dollar propped up. Even when the dollar comes under serious attack by market forces, the central banks and the IMF surely will do everything conceivable to soak up the dollars in hope of restoring stability. Eventually they will fail.

Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged – as it already has been.

In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O'Neill, the major topic was how we would get rid of Saddam Hussein – though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O'Neill.

It now is common knowledge that the immediate reaction of the administration after 9/11 revolved around how they could connect Saddam Hussein to the attacks, to justify an invasion and overthrow of his government. Even with no evidence of any connection to 9/11, or evidence of weapons of mass destruction, public and congressional support was generated through distortions and flat out misrepresentation of the facts to justify overthrowing Saddam Hussein.

There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq. I doubt it was the only reason, but it may well have played a significant role in our motivation to wage war. Within a very short period after the military victory, all Iraqi oil sales were carried out in dollars. The Euro was abandoned.

In 2001, Venezuela's ambassador to Russia spoke of Venezuela switching to the Euro for all their oil sales. Within a year there was a coup attempt against Chavez, reportedly with assistance from our CIA.

After these attempts to nudge the Euro toward replacing the dollar as the world's reserve currency were met with resistance, the sharp fall of the dollar against the Euro was reversed. These events may well have played a significant role in maintaining dollar dominance.

It's become clear the U.S. administration was sympathetic to those who plotted the overthrow of Chavez, and was embarrassed by its failure. The fact that Chavez was democratically elected had little influence on which side we supported.

Now, a new attempt is being made against the petrodollar system. Iran, another member of the "axis of evil," has announced her plans to initiate an oil bourse in March of this year. Guess what, the oil sales will be priced Euros, not dollars.

Most Americans forget how our policies have systematically and needlessly antagonized the Iranians over the years. In 1953 the CIA helped overthrow a democratically elected president, Mohammed Mossadeqh, and install the authoritarian Shah, who was friendly to the U.S. The Iranians were still fuming over this when the hostages were seized in 1979. Our alliance with Saddam Hussein in his invasion of Iran in the early 1980s did not help matters, and obviously did not do much for our relationship with Saddam Hussein. The administration announcement in 2001 that Iran was part of the axis of evil didn't do much to improve the diplomatic relationship between our two countries. Recent threats over nuclear power, while ignoring the fact that they are surrounded by countries with nuclear weapons, doesn't seem to register with those who continue to provoke Iran. With what most Muslims perceive as our war against Islam, and this recent history, there's little wonder why Iran might choose to harm America by undermining the dollar. Iran, like Iraq, has zero capability to attack us. But that didn't stop us from turning Saddam Hussein into a modern day Hitler ready to take over the world. Now Iran, especially since she's made plans for pricing oil in Euros, has been on the receiving end of a propaganda war not unlike that waged against Iraq before our invasion.

It's not likely that maintaining dollar supremacy was the only motivating factor for the war against Iraq, nor for agitating against Iran. Though the real reasons for going to war are complex, we now know the reasons given before the war started, like the presence of weapons of mass destruction and Saddam Hussein's connection to 9/11, were false. The dollar's importance is obvious, but this does not diminish the influence of the distinct plans laid out years ago by the neo-conservatives to remake the Middle East. Israel's influence, as well as that of the Christian Zionists, likewise played a role in prosecuting this war. Protecting "our" oil supplies has influenced our Middle East policy for decades.

But the truth is that paying the bills for this aggressive intervention is impossible the old-fashioned way, with more taxes, more savings, and more production by the American people. Much of the expense of the Persian Gulf War in 1991 was shouldered by many of our willing allies. That's not so today. Now, more than ever, the dollar hegemony – it's dominance as the world reserve currency – is required to finance our huge war expenditures. This $2 trillion never-ending war must be paid for, one way or another. Dollar hegemony provides the vehicle to do just that.

For the most part the true victims aren't aware of how they pay the bills. The license to create money out of thin air allows the bills to be paid through price inflation. American citizens, as well as average citizens of Japan, China, and other countries suffer from price inflation, which represents the "tax" that pays the bills for our military adventures. That is, until the fraud is discovered, and the foreign producers decide not to take dollars nor hold them very long in payment for their goods. Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it. If oil markets replace dollars with Euros, it would in time curtail our ability to continue to print, without restraint, the world's reserve currency.

It is an unbelievable benefit to us to import valuable goods and export depreciating dollars. The exporting countries have become addicted to our purchases for their economic growth. This dependency makes them allies in continuing the fraud, and their participation keeps the dollar's value artificially high. If this system were workable long term, American citizens would never have to work again. We too could enjoy "bread and circuses" just as the Romans did, but their gold finally ran out and the inability of Rome to continue to plunder conquered nations brought an end to her empire.

The same thing will happen to us if we don't change our ways. Though we don't occupy foreign countries to directly plunder, we nevertheless have spread our troops across 130 nations of the world. Our intense effort to spread our power in the oil-rich Middle East is not a coincidence. But unlike the old days, we don't declare direct ownership of the natural resources – we just insist that we can buy what we want and pay for it with our paper money. Any country that challenges our authority does so at great risk.

Once again Congress has bought into the war propaganda against Iran, just as it did against Iraq. Arguments are now made for attacking Iran economically, and militarily if necessary. These arguments are all based on the same false reasons given for the ill-fated and costly occupation of Iraq.

Our whole economic system depends on continuing the current monetary arrangement, which means recycling the dollar is crucial. Currently, we borrow over $700 billion every year from our gracious benefactors, who work hard and take our paper for their goods. Then we borrow all the money we need to secure the empire (DOD budget $450 billion) plus more. The military might we enjoy becomes the "backing" of our currency. There are no other countries that can challenge our military superiority, and therefore they have little choice but to accept the dollars we declare are today's "gold." This is why countries that challenge the system – like Iraq, Iran and Venezuela – become targets of our plans for regime change.

Ironically, dollar superiority depends on our strong military, and our strong military depends on the dollar. As long as foreign recipients take our dollars for real goods and are willing to finance our extravagant consumption and militarism, the status quo will continue regardless of how huge our foreign debt and current account deficit become.

But real threats come from our political adversaries who are incapable of confronting us militarily, yet are not bashful about confronting us economically. That's why we see the new challenge from Iran being taken so seriously. The urgent arguments about Iran posing a military threat to the security of the United States are no more plausible than the false charges levied against Iraq. Yet there is no effort to resist this march to confrontation by those who grandstand for political reasons against the Iraq war.

It seems that the people and Congress are easily persuaded by the jingoism of the preemptive war promoters. It's only after the cost in human life and dollars are tallied up that the people object to unwise militarism.

The strange thing is that the failure in Iraq is now apparent to a large majority of American people, yet they and Congress are acquiescing to the call for a needless and dangerous confrontation with Iran.

But then again, our failure to find Osama bin Laden and destroy his network did not dissuade us from taking on the Iraqis in a war totally unrelated to 9/11.

Concern for pricing oil only in dollars helps explain our willingness to drop everything and teach Saddam Hussein a lesson for his defiance in demanding Euros for oil.

And once again there's this urgent call for sanctions and threats of force against Iran at the precise time Iran is opening a new oil exchange with all transactions in Euros.

Using force to compel people to accept money without real value can only work in the short run. It ultimately leads to economic dislocation, both domestic and international, and always ends with a price to be paid.

The economic law that honest exchange demands only things of real value as currency cannot be repealed. The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or Euros. The sooner the better.

February 17, 2006

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 23 Jan 08 - 10:23 AM

Well that sounds like Ron Paul. But in the debates, the other candidates laugh at him every time he opens his mouth.

Subject: RE: BS: Crash of U.S. Economy
From: CarolC
Date: 23 Jan 08 - 11:41 AM

Yup. Ron Paul it is...

http://www.house.gov/paul/congrec/congrec2006/cr021506.htm

Subject: RE: BS: Crash of U.S. Economy
From: Amos
Date: 23 Jan 08 - 01:19 PM

I sus pect that the Crash of the Economy of the United States is something like Mark Twain's obituary published prematurely, about which he said "The reports of my death are greatly exagerrated".


A

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 23 Jan 08 - 01:32 PM

Yeah! On the other hand, he did say prematurely.

Subject: RE: BS: Crash of U.S. Economy
From: Amos
Date: 23 Jan 08 - 05:15 PM

Lou Dobbs (CNN) speaks out:

NEW YORK (CNN) -- President Bush's assurances that we'll all be "just fine" if he and Congress can work out an economic stimulus package seem a little hollow this morning.

Much like Federal Reserve Board Chairman Ben Bernanke's assurances last May that the subprime mortgage meltdown would be contained and not affect the broader economy. And it seems Treasury Secretary Henry Paulson has spent most of the past year trying to influence Chinese economic policy rather than setting the direction of U.S. economic policy.

There is no question that Bush, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid will quickly come up with an economic stimulus package simply because they can no longer ignore our economic and financial crisis. That economic stimulus plan will amount to about 1 percent of our nation's gross domestic product, an estimated $150 billion.

But all of us should recognize that the stimulus package will be inadequate to drive sustainable growth in our $13 trillion economy. An emergency Fed rate cut and an economic stimulus plan are short-term responses to our complex economic problems, nothing more than bandages for a hemorrhaging economy.

Bush, Pelosi, Reid and the presidential candidates of both parties have an opportunity now, and I believe an obligation, to adjust the public policy mistakes of the past quarter-century that have led to this crisis. And only through courageous policy decisions will we be able to steer this nation's economy away from the brink of outright disaster....

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 23 Jan 08 - 05:38 PM

It looks to me like Lou Dobbs is right again.

Subject: RE: BS: Crash of U.S. Economy
From: Bobert
Date: 23 Jan 08 - 06:23 PM

I heard on NPR today the EU has issued a staement that blames Bush's fiscal policies on the fiscal crisis the world now faces... Too much spending and not enough paying...

Hmmmmmmm???? Sound familiar??? Rememeber Ronnie Ray-gun???

B~

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 23 Jan 08 - 06:35 PM

It sounds very familiar, and a little bit scary.

Subject: RE: BS: Crash of U.S. Economy
From: Amos
Date: 23 Jan 08 - 07:44 PM

The politics of an economic nightmare
No U.S. leader wants to admit how bad the damage may get from the one-
two punch of the credit crunch and housing slump.

By Robert B. Reich (In Salon)
http://www.salon.com/opinion/feature/2008/01/23/reich_economy/print.html

Jan. 23, 2008 | A possible economic meltdown is worrisome enough, but
a possible meltdown in an election year is downright frightening. For
months now, Republicans have been pushing the White House to take some
action that looked and sounded big enough to give them some cover if
and when things got worse. President Bush has now responded with a
stimulus package more than twice as large as the one Bill Clinton
briefly entertained at the start of 1993 but couldn't get passed.

Not to be outdone, Democrats want to appear at least as bold, which
means they'll suspend pay-go rules and throw fiscal responsibility out
the window. In other words, hold your noses, because the "bipartisan"
stimulus package that's about to be introduced could be a real
stinker, including tax cuts for everyone and everything under the sun
-- except, perhaps, for the key group of lower-income Americans. These
are the people who don't earn enough to pay much if any income taxes,
but who are the most likely to spend whatever extra money they get and
therefore are most likely to stimulate the economy. The real behind-
the-scenes battle will be over whose constituencies get what tax cuts,
and for how long. Don't be surprised if the only thing Congress really
stimulates is campaign contributions. ...

Subject: RE: BS: Crash of U.S. Economy
From: CarolC
Date: 23 Jan 08 - 07:58 PM

I wonder if they'll provide us with another terrorist attack on US soil to take our minds off the economy going all to shit.

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 23 Jan 08 - 08:00 PM

I don't know, but Robert Reich is one of those guys who usually gets things right.

Subject: RE: BS: Crash of U.S. Economy
From: Kent Davis
Date: 23 Jan 08 - 11:30 PM

CaroleC and others,

I've been thinking about the characteristics of "Third World" countries listed in CaroleC's post of January 10, namely:
1. Dependence upon exportation of primary products to other countries in return for finished products,
2. Disparity between rich and poor, and
3. Enormous debt.

I'm wondering if those three are common characteristics of "third World" countries, but not DEFINING characteristics. In my profession, we have noticed that obesity is a common characteristic of diabetics. However, obesity is not a DEFINING characteristic of diabetes. Most obese people are not diabetic and many diabetic people are not obese.
It would be, shall we say, unhelpful, if I were to begin telling all my obese patients, "You are diabetic". It would be unhelpful in the extreme if were to tell all my non-obese patients that they are therefore not diabetic.
It is the simple truth to say that the U.S. economy has some characteristics more commonly associated with "Third World" than with "First World" status. It is equally true to say that some aspects of our economy are precarious. To say that the U.S. is now a "Third World" country, or to say that our economy has already collapsed is, well, let's just say it is not in accordance with the way those terms are generally used. I suspect it also tends to trivialize the real suffering of those in actual "Third World" countries, especially those in countries, such as Zimbabwe, that have suffered true economic collapse.

Kent

Subject: RE: BS: Crash of U.S. Economy
From: CarolC
Date: 24 Jan 08 - 12:45 AM

Kent, I think you and I are using very different definitions of "Third World" country. I am using the one that is in common usage. I have no idea what one you are using.

This appears to be the criteria you are using...

How are the rest of you doing? We still have plenty of turnips, a few beets, and some sheep we can slaughter. Here in the country, we are less affected by the crash. It must be eerie in the cities, the deserted malls, the freeways nearly empty at 5 p.m., the theatres and nightclubs abandoned for the churches and soup kitchens. I think of the emigrants swimming south across the Rio Grande, hoping for a new life in Mexico. I think of Miami, that once-proud city, depopulated, the now-pensionless elderly having fled Northward to live with their grandchildren, the Cuban-Americans seeking refuge in Havana. How everyone's lifestyle must have changed - people buying only the bare necessities, grocery stores with no expensive convenience foods, lottery tickets and cigarettes sitting dusty on the store shelves while everyone spends hoarded pennies on parsnips and cabbage, Applebee's, Ruby Tuesday, and TGIFriday's going out of business as everyone cooks at home, L.L. Bean and The Gap closing as families sew their own clothing. Who would have believed, in the old days of childhood obesity and type 2 diabetes, that America would now be having epidemics of scurvy and beriberi? I could not do it now, for it would break my heart, but someday I must visit your world

By these criteria, India, which is considered to be a third world country, would not fall into that category. Third world countries are all of those countries that have not reached the status of developed country. The developed countries are mostly found in Europe and to some extent in Asia (Japan, and Hong Kong, for instance), and Israel. Third World, or Developing countries are most of the countries in South America, Central America, Africa, much of the Middle East, and much of Asia, and parts of the former Soviet Block.

While hardly a scholarly work, this Wikipedia article nevertheless gives a pretty good synopsis. It certainly matches the criteria of Third World countries that I have been aware of for many years...

http://en.wikipedia.org/wiki/Third_World

I have no idea where you got your definition.

Subject: RE: BS: Crash of U.S. Economy
From: Donuel
Date: 24 Jan 08 - 08:29 AM

I would feel even more hopeful if Carol C. ran for President and won. Appointing Amos as press secretary, Riginslinger as chief of staff, John of Kansas as science and energy advisor and my wife as chief economist with Robert Reich on her staff.

Still we would have to face a 500 trillion dollar imbalance in need of correction. We have two choices; extreme capitalism or socialism. Do we make the adjustment slowly over a long hard painful time or do it quickly in extreme econmomic agony?

Whatever we do we will be paying for the Bush crime family's needs and wants for at least the next 12 years.

Subject: RE: BS: Crash of U.S. Economy
From: Donuel
Date: 24 Jan 08 - 09:15 AM

Soros prediction http://www.thefirstpost.co.uk/people%2C601%2Csoros-predicts-worst-recession-for-50-years%2C13683

Subject: RE: BS: Crash of U.S. Economy
From: CarolC
Date: 24 Jan 08 - 12:59 PM

LOL, Donuel. But I have to disagree with you about the two choices. I think there is at least one more choice, and possibly others as well. We could have conscious capitalism instead of extreme, predatory capitalism. That would be a huge improvement, in my opinion.

I forgot to include Australia and New Zealand among the Developed countries.

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 24 Jan 08 - 09:54 PM

I think the reality is becoming more obvious to more people as things progress. Multi-national corporations are loyal to no geographic area nor any group of people.

Subject: RE: BS: Crash of U.S. Economy
From: Amos
Date: 24 Jan 08 - 11:14 PM

Interesting remark by PJ O'Rourke, who has recently exhumed all the work of the grandfather of capitalism, Adam Smith. He says Smith was very distrustful of capitalist organizations and was keenly aware they are constantly out to gouge the market public.


A

Subject: RE: BS: Crash of U.S. Economy
From: CarolC
Date: 24 Jan 08 - 11:40 PM

Do you have a link for that, Amos? I'd love to see it.

Subject: RE: BS: Crash of U.S. Economy
From: Ron Davies
Date: 24 Jan 08 - 11:48 PM

However, Adam Smith was very much in favor of maximizing self-interest--which he saw as each nation emphasizing its strengths--and relying on world trade to supply needs.

Therefore he would be strongly in favor of globalization. We should not delude ourselves that this is not so.

Subject: RE: BS: Crash of U.S. Economy
From: Amos
Date: 25 Jan 08 - 01:54 AM

Carol:

He was interviewed by Jn Stewart on The Today Show on January 23. It should be on Comedy Central's site.

Regards,


A

Subject: RE: BS: Crash of U.S. Economy
From: Donuel
Date: 25 Jan 08 - 09:25 AM

cartoon
http://www.rense.com/1.imagesH/usa-dees.jpg

The national bribe... http://www.rense.com/general80/natbride.htm

Subject: RE: BS: Crash of U.S. Economy
From: CarolC
Date: 25 Jan 08 - 01:05 PM

Thanks, Amos.

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 25 Jan 08 - 09:56 PM

Of course, now that we've proven Adam Smith to have been basically wrong, you'd think somebody would get about the process of fixing the economy.

Subject: RE: BS: Crash of U.S. Economy
From: Kent Davis
Date: 25 Jan 08 - 10:08 PM

In my post of November 14, I thought it would be interesting to imagine what would happen if the U.S. suffered an economic collapse. It seemed to me that the consequences might include:
1. A net reversal of economic migration: "I think of the emigrants swimming south across the Rio Grande, hoping for a new life in Mexico..."
2. Extremely high unemployment: "...the freeways nearly empty at 5 p.m."
3. A substantial decrease in discretionary spending for entertainment: "...people buying only the bare necessities, grocery stores with no expensive convenience foods, lottery tickets and cigarettes sitting dusty on the store shelves while everyone spends hoarded pennies on parsnips and cabbage, Applebee's, Ruby Tuesday, and TGIFriday's going out of business as everyone cooks at home, L.L. Bean and The Gap closing as families sew their own clothing".
4. A loss in the value of pensions to the point that the elderly would not, in general, be able to maintain separate households: "I think of Miami, that once-proud city, depopulated, the now-pensionless elderly having fled Northward to live with their grandchildren..."
5. A change in prevelance of disease states affected by nutritional status: "Who would have believed, in the old days of childhood obesity and type 2 diabetes, that America would now be having epidemics of scurvy and beriberi?"

In the event of an economic collapse, what do you think would happen to economic migration, unemployment, discretionary spending, the value of pensions, and the prevelance of disease states affected by nutritional status?

As I read the Wikipedia article you suggested, I noticed that it classified the U.S. as a "First World" country. Perhaps you intended another reference.

Kent

Subject: RE: BS: Crash of U.S. Economy
From: Kent Davis
Date: 25 Jan 08 - 10:15 PM

The previous post is a response to CarolC's of January 24. Sorry for not being clear about which post I was referring to.

Kent

Subject: RE: BS: Crash of U.S. Economy
From: CarolC
Date: 25 Jan 08 - 10:26 PM

Since you put all of that in resonse to what I said about the US being a Third World country, you must have intended it to be in response to what I said. If you didn't mean it to be a rebuttal to what I said, why did you quote me in that post?

As I read the Wikipedia article you suggested, I noticed that it classified the U.S. as a "First World" country. Perhaps you intended another reference.

I guess Wikipedia hasn't caught on to the new reality yet. Give them time.

Subject: RE: BS: Crash of U.S. Economy
From: Kent Davis
Date: 25 Jan 08 - 10:36 PM

I did mean it to be a rebuttal.
Kent

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 25 Jan 08 - 10:38 PM

Frankly, it sounds like an improvement to me!

Subject: RE: BS: Crash of U.S. Economy
From: GUEST,Jim Martin
Date: 21 Feb 08 - 10:33 AM

The fallout from the U.S. sub-prime mortgage market continues, the Northern Rock Bank has now been nationalised. Whatever will happen next?

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 21 Feb 08 - 11:44 AM

Jim - Sadly, I think this whole thing is just getting started. It could get as bad as Reaganomics in the 1980's.

Subject: RE: BS: Crash of U.S. Economy
From: Rasener
Date: 23 Feb 08 - 07:02 PM

Guest Jim Martin are you in the UK and used to live in Market Rasen by any chance? If so Andy mcNee is trying to make contact with you.

Subject: RE: BS: Crash of U.S. Economy
From: GUEST,Jim Martin
Date: 24 Feb 08 - 05:49 AM

No Villan, that's not me.

Subject: RE: BS: Crash of U.S. Economy
From: Rasener
Date: 24 Feb 08 - 06:19 AM

OK thanks for replying Jim

Subject: RE: BS: Crash of U.S. Economy
From: GUEST,Jim Martin
Date: 27 Feb 08 - 11:48 AM

........and now UK banks/building societies are not providing mortgages unless minimum of 25% deposit is handed over! It's all a very far cry from the situation before Christmas!

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 27 Feb 08 - 12:33 PM

If they'd only stuck with a 20% deposit all the way through, we wouldn't be where we are now.

Subject: RE: BS: Crash of U.S. Economy
From: katlaughing
Date: 23 Jul 08 - 12:04 AM

Oh, THIS explains everything...Wall Street got drunk: CLick Here!

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 23 Jul 08 - 12:07 AM

Whatever they were into "drunk" seems to mild to explain it.

Subject: RE: BS: Crash of U.S. Economy
From: GUEST,Sawzaw
Date: 24 Jul 08 - 01:20 AM

"Haiti with 1% holding all the wealth"

A big assed lie

Subject: RE: BS: Crash of U.S. Economy
From: Riginslinger
Date: 24 Jul 08 - 10:29 AM

Okay, what percentage of Haitian society does hold the wealth. Or is there any wealth in Haiti to hold?

Subject: RE: BS: Crash of U.S. Economy
From: GUEST,Sawzaw
Date: 24 Jul 08 - 10:55 AM

"1% of whom own nearly half the country's wealth"

Subject: RE: BS: Crash of U.S. Economy
From: DougR
Date: 25 Jul 08 - 01:42 AM

Any of you folks checked out the "doom and gloom" posts when this thread started? No doubt about it, the sky is falling. Oops, I said that in 2007! Is it still falling? Most of you folks seem to think so. When is it going to stop falling? Most times, when something falls, it doesn't wait a year to hit the bottom.

DougR