Third Party & Independents Archives

Look In the Mirror for a Change

Our economic whirlwind is filled with such irony that the fun of sorting it out almost outweighs the pain it’s causing.

Irony #1: For years, champions of unbridled capitalism allowed banks, insurers and others to merge, resulting in financial institutions that have now become “too big to fail” – leading to a quasi-socialist system as government rescues those teetering institutions (Freddie Mac, Fannie Mae, AIG, etc.).

Irony #2: For years, champions of the underprivileged fought to end red-lining, whereby financial institutions were thought to discriminate against borrowers based upon geographic location. To end such discrimination, banks were strongly encouraged to make loans more readily available to folks with lower credit scores. Now those same champions of the poor are castigating those banks for making loans to people who couldn’t afford to repay them.

Irony #3: We, who weren’t complaining back when first the Nasdaq and then the values of our homes were rising to unsustainable levels, are now wondering why someone didn’t do something earlier to prevent today’s carnage. The answer is simple – because we wouldn’t let them.

Therein lies another irony. For all the blame we want to place – and on a political site such as this, it’s practically a foregone conclusion where that blame will be placed – the real blame lies with us. If the economy slips one measly percentage point we have a collective cow and start shouting for someone to do something. If "they" don't, we want "them" thrown out on their ears. We call them out of touch and heartless and beholden to the special interests. Because they don't want to lose their jobs – and because voters are the most precious special interest of all – they do something.

In 1998, when the Russian and Asian credit crisis threatened a worldwide financial collapse, "they" engineered a bailout of Long Term Capital Management and the bull market of the 1990's continued on its merry way - and we were happy. When that bull market came crashing down in 2000, "they" cut interest rates and taxes so the economy wouldn't fall into a recession - and we were happy. That easy money created a housing bubble which also crashed, so "they" take over mortgage lenders and insurance companies and arrange marriages between investment banks - and we are happy (for about a day). Our Hummers and Expeditions and Suburbans get too expensive to drive because our demand for oil knows no bounds, so "they" send us rebate checks - and we are happy (for about a week).

But eventually, "they'll" run out of money and we'll demand they do something. Then, and only then, will we realize that "they" are us. For all the calls for change this election season, the most important change needs to be among those of us who do the electing. But that’s not the change we want, which may be the greatest irony of all.

Posted by Paul Szydlowski at September 17, 2008 10:22 AM
Comments
Comment #263224

There is a word invented for such mergers and acquisitions that result in enormous small numbers of institutions in the same business:

OLIGOPOLY! And the effect of an oligopoly going south as a result of its own mismanagement is the nearly the same as if a Monopoly were to do the same. They are kissin’ cousins, and Republicans got exactly what their distorted and greedy ideology asked for. The absolute shame of course is that 295 milllion other people have to suffer the consequences of their ideology.

But, hey, ignorant is as ignorant does. Half those people suffering actually voted for the people who created this suffering they now experience. And the Greek Mythic Tragedy is, they are ready to vote the same way again.

Ignorance is what politicians need to get reelected in the face of bad performance. And more than half the people in this country are content to do their bidding.

Congressional approval rating 19% and yet at least 85% of voters will vote their representatives back into office on November.

GW Bush’s approval ratings around 28%, yet the polls indicate about 45% of voters are panting to elect John McCain whose ideological views and absence of education and knowledge of anything outside military history rivals that of GW Bush.

Voters were warned in 2000 that Bush was not who he made himself out to be nor what the GOP made him out to be. They wouldn’t listen. Voters are being warned of exactly the same thing about McCain and with documented evidence overflowing, but, according to polls, half of them still aren’t listening and can’t wait to repeat the mistake of 2000 and 2004.

It truly is insane to do the same thing over and over and expect a different result.

Bush ran in 2000 on fiscal responsibility just like McCain is now. But, Bush didn’t know didly about economics then, and only a tad bit more now after 8 years OJT. Now comes McCain, who admits to voting to spend trillions of American tax payer dollars over his decades in the Congress without ever bothering to pick up an Economics 101 book and studying up on what it was he was spending as a Senator.

If we keep repeating this history, we truly will have no future worth living or remembering.

Posted by: David R. Remer at September 17, 2008 4:44 PM
Comment #263241

Thanks Paul for that refreshing breath of historic reality. I know you don’t expect many to understand what you are saying…but it needed saying.

Most responders I suspect, such as David above, will simply go back to their tired old talking points and never realize the truth of your statements. We’re the problem!

Posted by: Jim M at September 17, 2008 5:33 PM
Comment #263255

Many years ago, there was no such thing as branch banking in Illinois. There were neighborhood and local small town banks and savings & loans everywhere. Then the politicians decided that branch baking was to be allowed. The biggest banks all bought up as many of the small banks as they could, and savings & loans as well. This eliminated local control over lending practices.

There are twin mcmansions near where I live, about 4000 sqft, evidently built on spec. They have been asking $799 K for almost a year, and they haven’t gotten a buyer. Construction on nearby condos is being slowed down because no one is buying. They were not built for “persons with lower credit scores”. How long can banks hold on to loans that have no immediate prospect of repayment?

Posted by: ohrealy at September 17, 2008 8:32 PM
Comment #263281

Aw, Jim M., Did I use too big a word? Are the words of Christ, Plato, Adam Smith old and tired? Of course they are. Reason: They are as valid today as thousands of years ago. Just because words are old and you are tired of hearing them, just means that YOU are tired of them. Nothing more.

Currency is the test of wisdom over time, as in references to Adam Smith’s, T. Jefferson’s, or A. Hamilton’s words for example.

The word and concept of oligopoly has been around a number of years now, but, has only begun to achieve currency status amongst economists, politicians, and economy reporters in the last seven years. Interesting coincidence that its rise in currency correlates with Republican run government, isn’t it?

Posted by: David R. Remer at September 18, 2008 12:25 AM
Comment #263283

ohrealy, sadly that story of branch banking has tentacled through out the American economy and the concept of decentralized risk has been fading from our economic landscape at an alarming rate. Your reference to what happened in Illinois is dead on mark.

How long? That depends on too many factors for anyone to answer with any certainty. Growing estimates of when the industry will get a handle on just what their paper is worth and therefore their balance sheets, are now pushed out to 2010 at the earliest. Add global devaluation as a result of global recession, and the question is made even more difficult to answer.

But, your question carries fundamental importance in its implication that fundamental systemic destruction can occur to a few, or many, nation’s economies. Russia is a case in point as they kept their markets closed as a result of runs on their banking and financial systems for a second day in a row.

Confidence is one of those systemic fundamental cornerstones for a healthy economy. It can be shattered in weeks or months, but can only be rebuilt over many years, if at all, depending on repetitive assaults upon it that may occur over the years of attempts to rebuild it. With $53 Trillion dollars of debt obligations facing Americans, flexibility in rebuilding that confidence is seriously compromised. This is the very definition of opportunity cost at the basic economic level.

Russia has it far worse, because they have no history of confidence in their economy and markets. But, as the world’s 3rd largest oil producer, what happens there can and will affect us here. This is one reason America MUST commit to eliminating fossil fuel energy from its future, if it is to reinstate confidence by the American people in our future. Our economy has become far too dependent upon foreign energy, loans, and imports, to foster a resilient and flexible economy in the future capable of withstanding shocks to the global and foreign partner’s economic foibles.

Increasing our population increases our dependency upon foreign economies. This is why illegal immigration is such an integral part of whether or not we can salvage our future. The interconnected dependencies of these concepts and relationships are beyond John McCain’s comprehension and education. Obama has demonstrated real growth in the last 19 months in grappling and grasping the complexity of these challenges, though, he still has much further to go.

Given the choice, it is a no brainer for me and should be a no brainer for all who are capable of grasping the complexity and interconnected nature of our challenges, dependencies, and addictions to outmoded paradigms and sloganized ideologies. We need a leader who not only grasps this, but, can craft solutions that address a host of issues with far more positive consequences than negative on balance. A pigeon hole approach or mind set such as McCain’s which can’t integrate the costs of Iraq with our economic and debt plight, simply is NOT going to cut it.

It was 10 years before America’s Great Depression cycle ended, and most of the damage to its citizens had been reaped. And that was with the massive untapped labor force, natural and technological resource potential still ahead of her. We are not in that position today with great untapped cheap natural and labor resources lying ahead of us. We do have great untapped technological potential still ahead of us, but, tapping that will require a sound financial investment community and ample liquidity for R&D, and a rejection of the politicization of innovation. Are we up to fulfilling that potential? Obvously, not now, or in the near future.

This is why folks like Paulson and Bernanke are burning the midnight oil week after week after week, month after month, to try to prevent a cascade effect as was seen in the early 1930’s. Our economy is in peril, as much due to its dependence upon a receding global economy, as unsound government and private sector practices and abuses here domestically.

As former Chairman and Chief Executive Officer of Goldman Sachs, Paulson was steeped in the very same motives and opposition to regulation of private sector operations as his cohorts responsible for much of the deflation of asset backed commercial paper.

Being responsible now as Treasury Secretary for failing to avert this meltdown, and for righting it as best as the power of his position will allow, it is only fitting that he burn the midnight oil with his new found awareness and appreciation for the Enormous Costs of laissez faire capitalism.

In all, I have to give him an A for his efforts since February, when it fully dawned on him what the potential downside risk is here. And Paulson always, as far as I can tell, favored full disclosure accounting principles. His contribution to this meltdown was in resisting enforcement of such oversight of accounting for regulatory purposes by the government.

He sure is a believer now, though isn’t he? It is amusing to watch Republicans suddenly adopt Democrat mantra’s for confiscatory action, government oversight and regulation enforcement, and tax payer supported handouts when the failures of Republican ideology come home to roost. It is like watching the Keystone Cops run the country’s economy, or the Three Stooges attempt to replace a leaking pipe.

Sadly, however, Republicans still don’t get the demand side of the economic equation. They will act like Democrats to rescue the supply side of our economy, but, continue to fight efforts by the government to shore up the Demand/Consumer side of the economic equation calling such efforts, welfare, socialist, and unmotivating.

Yet they can’t seem to find such words when it is the executives and wealthy block shareholders at Fannie or Freddie, or Bear Stearns or AIG who are the direct recipients of the very same welfare, socialist and unmotivating tax payer supported underwriting and investment.

Regrettably, this all means millions of individual stories of financial tragedy and severe anxiety and fear for tens of millions of Americans who were just squeaking by prior to the meltdown, layoffs, foreclosures, and 32% credit card interest rates without potential to eliminate such debt under the Republican sponsored Bankruptcy Reform of several years ago.

We may save AIG and Bear Stearns, but, we are losing trillions of consumer and individual small investor dollars for years to come. The individual American average Joe student, wage earner, 401K holder, and retiree are as absolutely important essential to our economy and its future as the producers and big money chasers and underwriters. But, they lie in Republican’s ideological blind spot.

Posted by: David R. Remer at September 18, 2008 12:58 AM
Comment #263286

Paul,
A good article and one that I can see is true. For why it may of been a few years ago when President Bush decided to split a piece of gold in half and try to say gas at $2.00 was a good thing. I do believe that I warned the Left and Right that soon they would be paying $4.00 a gallon and the price of everything would double or triple just as they did in the 70’s.

So, can the Democratic and/or Republican Leadership learn the lesson of history and inspire the Children of the 21st Century?

Posted by: Henry Schlatman at September 18, 2008 2:08 AM
Comment #263313

Henry

So, can the Democratic and/or Republican Leadership learn the lesson of history and inspire the Children of the 21st Century?

I think one side is very openly trying to inspire the American people to pursue an avenue of true energy independence. The other, by way of short term thinking would rather we continue with short term solutions and procrastinate on long term solutions until we absolutely have no other choice. Of course that other side is motivated by obligations to those short term suppliers. They prey on the weaknesses of folks who have little means to live beyond today, let alone the means to worry about tomorrow.

Posted by: RickIL at September 18, 2008 11:03 AM
Comment #263356

“Aw, Jim M., Did I use too big a word? David Remer, I have no idea what in the world you are talking about. Get some sleep!

Posted by: Jim M at September 18, 2008 12:56 PM
Comment #263371

Jim M, thanks for bringing a smile into my afternoon.

I ask if I used to big a word. And you reply you haven’t any idea what I am talking about.

It’s priceless. (:-)>

Posted by: David R. Remer at September 18, 2008 1:43 PM
Comment #263404

David Remer thanks me for the smile my response generated for him. You’re very welcome David though I still have no idea why. Please reveal the “big word” and the text it came from so I can smile along with you. By the way, do you know why most women don’t blink during sex? There isn’t time. Come on…just another small smile.

Posted by: Jim M at September 18, 2008 4:46 PM
Comment #263450

Jim M., the word I was referring to was Oligopoly.

Posted by: David R. Remer at September 19, 2008 2:38 AM
Comment #263498

McCain Keyboard disabled = MYTH

McCain returned to the U.S. and going thru rehab, flew fighter jets again? Doesn’t that require some hand and finger dexterity?

Besides, I’ve watched my father, for many years, type mostly with his two index fingers.
And how many fingers does it take to use a mouse, roller-ball, or touch-pad?

This myth shows how desparate some people are and how low they will go to rationalize their blind partisan loyalties.

Now, on to Paul Szydlowski’s article.

You are one of the few people that have taken the very unpopular position that voters only have themselves to thank for a majority of their problems.

But you are 100% correct.

Someone needs to tell the voters that they themselves are the source of most of their problems.

Speaking of ironies, consider the Voter Paradox:

  • (a) Most voters polled give Congress dismal approval ratings (as low as 95).

  • (b) But most voters repeatedly reward incumbent politicians in Congress with 85%-to-90% re-election rates.

Not very smart is it?

So, why do our politicians crap all over the voters/tax-payers?
Remember the “Life” cereal commercial:

  • “Give it to Mikey. Mikey will eat anything!

Well, the voters/tax-payers are like Mikey - “Give it to the voters/tax-payers. They’ll eat anything!
Our incumbent politicians crap all over the voters/tax-payers, decade after decade, and the voters/tax-payers still repeatedly reward those same incumbent politicians in Congress with 85%-to-90% re-election rates (one-simple-idea.com/CongressMakeUp_1855_2008.htm).

HHHHMMMmmmmmmmmmmm … could it be most of the voters/tax-payers have been brainwashed?
If not, what is the reason for such blind and misplaced partisan loyalty?
Even a sheep would probably have enough common-sense to move out of the way when a pig is crappin’ all over it.

Perhaps enough voters will be less apathetic, complacent, and blindly partisan when enough of the voters are deep in debt , jobless , homeless , and hungry ?

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful: One-Simple-Idea.com/NeverWorse.htm).

Posted by: d.a.n at September 19, 2008 11:36 AM
Comment #263506


Dan: how’s it going?

It is not called brainwashing per say. It is called conditioning, carrots and sticks. Skinner and Pavlov can fill you in on the details.

orealy: The banking situation is not unique to Illinois. Nor is it unique to banking. The corporations are taking over virtually every aspect of our lives and in case people haven’t noticed, as they do so, price competion is disappearing.


Posted by: jlw at September 19, 2008 1:05 PM
Comment #263522

CORRECTION:

    (a) Most voters polled give Congress dismal approval ratings (as low as 95 9%).

jlw wrote: d.a.n: how’s it going?
Good, thanks!
jlw wrote: It is not called brainwashing per say. It is called conditioning, carrots and sticks. Skinner and Pavlov can fill you in on the details.

Yes. Same thing (e.g. lies; fear mongering; etc.), carrots (e.g. false promises; bribing voters with their own tax dollars; craddle to grave care and entitlements; tax cuts but mostly for the wealthy; etc.) and sticks (e.g. IRS; taxes; no Habeas Corpus; eminent domain abuse; institutionalize illegal immigration to depress wages and increase profits; rampant lawbreaking by the government; pardons for the few if ever convicted; forcing U.S. troops to execute missions that are not the best way to make the U.S. safer; forcing U.S. troops into 2, 3, 4, or more tours in Iraq and/or Afghanistan; rampant corporacy; government FOR-SALE, etc., etc., etc.). Skinner and Pavlov can fill you in on the details.
HHMmmmmm … conditioning, carrots, and sticks are also brainwashing tools.

Remember the Skinner box, with a lever/button?

That’s like the voting booth, with a party-lever/button.

The only difference is that the voters have to wait 2 to 4 years to see what the result of their action was. That’s too long. If you punish a dog 2 to 4 hours after it did something wrong, the dog is never able to associate the punishment with their bad deed.

If the results of the voters’ actions were more obvious, and if the voter was able to return to the voting booth more often, the voters might finally draw an association between their bad voting habits and the painful consequences of their bad voting habits.

Posted by: d.a.n at September 19, 2008 3:11 PM
Comment #263600

RickIl,
Why I was surprised to hear Obama talk about becoming energy independent in his convention speech, I was equally amazed that McCain chose mot too. However, knowing that it will take more than talk to bring the two sides together, I can only smile as I go forward.

For why I cannot and/or willnot explain how it has come to be that I am allowed to ask My Elders and Peers to show me one other time in Our 233 years when a political party put a candidate on their Presidential Ticket who was under active investigation. Knowing that I hold a Politically Correct Argument against the Democratic and Republican Leadership, I feel that I have no other choice but to show the Children of the 21st Century why Americans fight so hard for what they know and understand to be Right Regardless.

Yes, “We the People” may need a new political party in the coming years. For with Mr. Pickens wanting to allow the Corporations to supply Society with the energy she needs and I wanting the Consumers to supply the Corporations and Society with the energy needed to build a better world. I have serious reservations if the Democratic and Republican Leadership can fairly represent Government in the 21st Century.

Posted by: Henry Schlatman at September 20, 2008 7:08 AM
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