Third Party & Independents Archives

September 20, 2008

Economic Melt Down Delayed, Temporarily!

Three days ago, the world took a half step that had one foot on the cliff and other other over the abyss. Fed Chairman Bernanke, Treasury Secretary Paulson, and Congressional Leaders gathered in an emergency meeting and observed to the shock of many, the other foot stepping into the abyss. They agreed in unison and immediately to pivot the dangling foot back onto the cliff side. The abyss was a run on money market funds around the globe, which was poised to take place in hours or days, at most, creating a global financial meltdown.

The Big Picture.

What has transpired however, since yesterday morning, in avoiding the abyss can be compared to a vehicle's driver suddenly recognizing an imminent head on collision with a tractor trailer, and swerving the vehicle off the road and away from head on collision. What lies ahead of the careening vehicle running off the road is now what leaders are trying to determine. Is the vehicle now going to smash into an Oak tree, a lake, a group of celebrating innocent bystanders, or come to an uneventful stop in a level, dry cow pasture, harming no one and nothing?

The answer to the last question can be partially answered, now. What lies ahead of the careening vehicle is not a level, dry cow pasture. This careening vehicle has not left the pavement in a rural area of Kansas. It left the pavement in the heart of Manhattan, New York, and there is no distance to slow down before colliding with something else.

That's the big picture of what is happening for those who would be lost by a detailed explanation of the financial mechanics of what is happening. But, for those capable and willing to follow, the major details are worth grasping.

The Beginning.

Lisa Lerer explains in March of 2008 one of the crucial causal factors of the current meltdown:

The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.

“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,” the Illinois senator running for president said in a New York economic speech. “But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006.

Make no mistake, for Sen. Phil Gramm to be successful in this effort required a Congress and President with the ideological belief that government oversight and regulation were an impediment to wealth creation and long term economic health. Gramm found such favorable views in a Republican controlled Congress and Pres. George W. Bush.

By January of 2007 when Democrats took back control of the Congress, the damage to our future financial systems had already taken place, as the markets around the world had engaged in years of trading asset backed paper in an environment of real estate transactions in which buyers were not financially qualified to carry the mortgage burdens they signed for, and an environment in which property valuations had reached bubble proportions. All that was needed to bring the crisis to the fore was a major financial institution failing to demonstrate adequate financial resources to cover its falling values in mortgage backed paper assets.

By Fall of 2007, one year ago, it became clear to many that this trigger of a failing financial institution and the cascade effect it would have on other financial institutions was inevitable. The Democratic controlled Congress had been in power for only 6 or 7 months when this awareness began to spread throughout Wall Street and Government circles.

The Political Dilemma.

Once Congressional politicians, The Federal Reserve Board, and the Bush Administration acknowledged what was happening last Fall, they were caught in what at the time, appeared to be an untenable political situation. If they acted to avert the pending disaster through government intervention, they would bring to the public's attention the dire circumstances which their intervention would address, and an election campaign was already underway. I use the words, appeared to be, regarding an untenable situation, because had they intervened a year ago, the cost of intervention would have been vastly lower than the cost to be born by taxpayers today and in the future.

But, the following cannot be ignored. The political will and public support for a federal intervention last year that entailed putting taxpayers on the hook for up to 1/4 of a trillion dollars of new foreign loaned debt, would not have been tolerated by Pres. Bush, Congressional Republicans, many Democrats, Wall Street financial executives, nor the public. Hence, the inevitable, current politicians will rationalize, simply had to play itself out to the point that the crisis became palpable and real for Wall Street, the public, and the Politicians, all at the same time. Only then would a massive intervention by the federal government with an enormous bailout at tax payer expense, be viewed as a rescue from far worse calamities.

But, this rescue is a calamity, in and of itself. This rescue salvages global financial markets in the short run, but, creates an as yet undetermined, massive burden and disruption of economic balance in international debt and the relationship between American tax payers and the deficit, debt, and interest costs of this rescue going forward. And it marks a sea change in the American political landscape such that the old Republican ideology of government keeping its hands off the private sector, is now abandoned, even by Republicans in the Congress and White House, and Sen. John McCain as well.

Sen. McCain and Sen. Obama have both promised tax cuts and to reduce the deficit from this fiscal year's level of $430 billion dollars. That is now all fantasy. Tax cuts can not, and will not, happen. The next president of the United States is going to inherit a minimum of more than 1/2 trillion dollar deficit for fiscal year 2009. And as much as another $1 trillion dollars in deficits will be added to following year's budgets. The latter will be a result of tax payers owning mortgage debt on properties whose real market sale value will fall far short of what is owed on those mortgages.

From this point forward, any utterances by Sen.'s Obama or McCain on cutting deficits and lowering taxes will be bold face lies or an expression of incredible ignorance of what is happening and of basic economics and government finance. It has not yet sunk in for the American public that what is now transpiring as I write, in the halls of Congress and the White House will surge America's national debt from 9.64 Trillion dollars to 11 trillion dollars in the next 12 months.

The impact this will have on foreign nation's willingness to lend the U.S. government the money to afford its interest payments on that debt is very much an unanswered question. But there is no doubt whatsoever, that American tax payers will be borrowing from foreign governments and corporate lenders the money which the Government will hand right back to those foreign governments and lenders as interest on debt to them.

So everyone understands, this is exactly the same situation millions of Americans are now in; where their credit card debt is making them a higher risk borrower, causing their interest rates to rise, causing their monthly credit card payments to rise, causing these Americans to open new credit card accounts so they can continue to borrow to stay up on their payments with the other credit card lenders. It is a hole we are in, and the more we work to dig our self out, the deeper the hole becomes.

The Middle. Fundamentals Don't Change.

This rescue by the tax payers (Constitutional issues aside), does not change the economic fundamentals which Pres. Bush and Sen. McCain insist are still strong.

  • America will continue to face increased competition for jobs from emerging nations capable of providing lower labor costs for production and manufacturing.
  • America will continue to face shortages in professionally educated labor force areas like nursing, teachers, engineers, and scientists.
  • America will continue to see wages rise slower than inflation, making middle class working Americans poorer year after year.
  • Growing numbers of millions of Americans will face either reduced Social Security benefits or increased taxes, or both, to keep retirees out of poverty.
  • Americans will continue to face a bankrupting health care system that turns 10's of millions of Americans into bankruptcy filers in coming decades, or see their taxes rise dramatically in order to insure Americans do not die or suffer for lack of health care access.
  • And wealth created in America will increasingly be pressured to move overseas where social upheaval and demands upon that wealth by taxation become comparatively less than here in the U.S.
  • And finally, the cost of improvements and maintenance of America's infrastructure, including new energy sources, transportation pathways, schools, and water resources in the West, have only one direction going forward, up.

In other words, the economic fundamentals of the world's largest debtor nation only get worse going forward. This is a direct result of American debt. In 1945 America carried an enormous debt burden, greater than today as a percentage of gross domestic product. But, in 1945, America had a tremendous untapped labor force to draw upon, and dramatically increased education levels of that labor force to look forward to, and half of the world's nations as potential export customers to grow American business, jobs, and middle class wealth upon. None of these 1945 potentials for managing and growing our way out of debt, exist in our future going forward.

In fact, it is China, Malaysia, United Arab Emirates, and India which are positioned as we were in 1945, with tremendous economic growth in its future with their rapid education levels of their population, great untapped labor force potential, and each other's growing middle classes to export goods and services to, creating rising wage jobs and wealth for their growing middle class. And America, already the largest debtor nation, has inescapably more and more debt and interest costs on that debt in its future closing door after door of opportunity in the years ahead for lack of the funds to invest in those potential opportunities.

Again, to bring this home in understanding, our national situation is the same as a wage earner with two kids graduating from high school. This family's net wages are $300 less than the bills each month for paying the rent, buying groceries, making the car payment, and paying the utility, doctor, and dentist bills. The children in this family have no choice but to watch the college opportunity doors close as the cost of borrowing to put the children in college would bankrupt the family entirely. With the college opportunity closed, the children will enter the labor market at wages that will continue to fail to keep pace with the rising costs of living, and their standard of living will erode over time as the years pass in the jobs they could acquire with a high school education, as they struggle to take on a family and all the costs associated with it.

The End. One ray of hope!

America faces tough times. How tough, and whether America defaults on its debt obligations as the Soviet Union had to, or Brazil nearly had to between 1998 and 2002, depends entirely on 2 things. First, whether we elect leaders who have, or will, abandon ideological theory and commit to pragmatic solutions going forward. And second, whether we the voters and tax payers are prepared to make some sacrifices from the wealthiest down through the middle class in order to rebuild our nation's and children's future opportunities.

Electing leaders with the mindset that brought us to the edge of this abyss like Phil Gramm and those he now advises, is clearly not the way to a future of hope. Our current lot of leaders, while taking nearly heroic, and horrific steps to save us from walking into the abyss, are the same leaders who brought us here in the first place.

It is clearly time for a change in America. But, that change must take place at the grass roots of our nation that elects a different kind of leadership. America needs a leadership that doesn't cling to preconceived ideas about how things should be according to some political party ideology. America needs leadership with the genuine ability to grasp the reality of what is. America needs a leadership with the commitment to chart a path forward that recognizes the necessity for us all to work together, sacrifice together, and contribute together toward paying our debts, living up to our difficult choices, and investing, all of us according to our means, in the future of both our children and our nation.

If the voters do not elect such a different kind of leadership, then the leadership we will get will fail us, our children, and our nation. We remain for the moment still, a great nation with less, but still great potential and opportunity. The door of opportunity is closing, however, and if voters do not throw a foot in the door to prevent it from closing entirely, that future of opportunity will close on all of us, except the very, very wealthy.

Posted by David R. Remer at September 20, 2008 06:19 AM
Comments
Comment #263607

david

pretty scary eh. i’ll be curios to see what happens on wall street when the moratorium on short selling is lifted. my guess is any gains made will be quickly lost, and then some. i think allowing those institutions to fail when this all started would have sent a clear messege, screw up, don’t expect the tax payers to bail you out. a little pain in the short term IMO would have avoided a lot of pain in the long term.

Posted by: dbs at September 20, 2008 09:55 AM
Comment #263610

dbs, yes, very scary. Without intervention at this time, we could have been unemployed within the month. Our 401K could have been cut in half, and pension plans would have been decimated. Very scary stuff.

But, the absence of intervention however, even as early as Bear Stearns, would have triggered the same crisis, just by a different route. The structure of this debacle was created and grown from 1999 through 2006. The time to prophylacticly intervene was when Greenspan held interest rates at 1% for a protracted period while Bush pursued his ownership society which was a green light to the mortgage industry to make that sale in any way possible, since the passage of the Gramm-Leach-Bliley Act removed the impediments of oversight and responsible lending requirements.

We will likely never know what the threshold month was, between 2003 and 2006, when the amount of real market asset valuation ratio to loan principal outstanding obligation reached a level that would cause a cascade failure amongst financial institutions and banks. But clearly, by late 2006 we had crossed that threshold because it was then, that I and a number of other writers in the media began issuing the warnings of coming financial and market crisis if immediate action were not taken.

Posted by: David R. Remer at September 20, 2008 10:35 AM
Comment #263622

David

Thank you for this very well written and easy to comprehend article. As you know, you and I think along the same lines. I think we both, unlike most Americans, tend to view our situation with a broad view. You have done an excellent job of presenting what I suspect the likes of Bush and Gramm would prefer the majority not take into consideration. If more media would focus on the totality of this issue perhaps the general populace would experience a real eye opener. You know as well as I though that most working class people are struggling just to live for today. To ask them to suffer more in an effort to avoid going over that edge may be too much for them to willingly fathom and accept. Unfortunately I think the situation has reached a point where suffering can not be avoided regardless of who we elect to the big house. The question is, do we put into power people who recognize the need for new direction and begin the healing process. Or do we stay with the old tried and true who will let us continue to stew in failed policy by way of avoiding progress in favor of short term band aids.

Posted by: RickIL at September 20, 2008 12:20 PM
Comment #263632
It is clearly time for a change in America. But, that change must take place at the grass roots of our nation that elects a different kind of leadership. America needs a leadership that doesn’t cling to preconceived ideas about how things should be according to some political party ideology. America needs leadership with the genuine ability to grasp the reality of what is. America needs a leadership with the commitment to chart a path forward that recognizes the necessity for us all to work together, sacrifice together, and contribute together toward paying our debts, living up to our difficult choices, and investing, all of us according to our means, in the future of both our children and our nation.

Exactly why there should never be another Republican or Democrat elected to any office. Both only offer more of the same.

We’re in a damned if we do and double damned if we don’t situation here. And the coming meltdown hasn’t started only in the last 16 years. It been coming at us for the last 50 years. And it’s been growing in momentum while our Congresses and Presidents of both parties ignored it, and helped contribute to it.
Right now without some very drastic measures I don’t see us avoiding an economic meltdown. In fact I don’t see anyway of avoiding it. The meltdown is going to happen regardless of who wins in November. The question is how can we minimize the damage? And the damage is going be devastating at best.

Posted by: Ron Brown at September 20, 2008 01:12 PM
Comment #263636

Both duopoly candidates seem opposed to W doing anything or being capapble of doing anything useful in his remaining 122 days, exactly four months more of uselessness. IIRC, because of the Great Depression, the date of the POTUS’s assumption of office was changed from March to January. I think it should be changed again, to the day after the electoral college vote, which should be held as early as legally possible.

On a previous topic, here is an interesting piece on harvesting water from clouds in Yemenv:
http://www.youtube.com/watch?v=NNSRWXZGNao

Posted by: ohrealy at September 20, 2008 01:20 PM
Comment #263677


David: Rather onesided don’t you think. Final passage of the Gramm-0Leach-Bliley Act was 90-8-1 in the Senate and 362-57-15 in the House. It is a rare occasion when Congress acts in such a bipartisan manner. Most of these politicians are still in Washington and the majority of them will be reelected even though they are unfit to hold office. There is only one way to put this, the voters of this country, especially those who call themselves Democrats and Republicans are morons.

Can anyone name a peoples more deserving of an economic collapse and the deprivations of a massive depression than the American people?

There are a few people in this country who have made out well by all of this. they are setting on that money, waiting for everything to hit rock bottom so they can move in and buy it up.

Posted by: jlw at September 20, 2008 01:52 PM
Comment #263678

RickIl, thanks. I actually awoke from a dream last night just before colliding (in the dream) with a semi on the highway. Within 45 seconds of awaking from that dream, I recognized the parallel with what we were witnessing in government and on Wall St. I got my coffee, and sat down to write this article, so I could go back to sleep and leave the MacK Truck in cyberspace, instead of dreamspace.

Posted by: David R. Remer at September 20, 2008 01:53 PM
Comment #263681

Ron, America can pull out of this, if she takes the right actions and steps, and is lucky enough to dodge another major financial calamity such as a major natural disaster, and the world economy and its major players remain intact.

It’s a very lot of ifs. But, to act as if trying isn’t worth it, is throw all and any chance away. We must try. We must reach out to the others in our lives and explain this to them, and why it is imperative that we move in a different direction and end this repetition of political-economic myopic behaviors.

Posted by: David R. Remer at September 20, 2008 01:58 PM
Comment #263682

ohrealy, when I heard Bush was going to jump into this fray, I became even more concerned. But, as it turned out, he just wanted to take credit for efforts of Paulson, Bernanke and others, which is fine with me. As long as he is not deciding anything, we have hope of getting through this.

Posted by: David R. Remer at September 20, 2008 02:00 PM
Comment #263685

jlw, not one sided at all. Americans don’t elect economists to office generally. Phil Gramm has a Ph.D. in economics and naturally, many in Congress deferred to his academic credentials. Huge, HUGE mistake. But, then, Sen. McCain never saw the need, in decades of spending trillions of American’s tax dollars, to pick up any economics education of his own. Same was true of most of those voting on this horrible Republican ideological bill.

And the bill did not pass without many trade offs and concessions by both sides for other things in this and other bills. None of this history however, negates the fact that this bill was Phil Gramm’s baby and this same Phil Gramm is now the economic adviser of Sen. John McCain.

Even Hank Paulson was singing the praises of deregulation all these years, until shortly after taking on the position of Treasury Secretary, and then saw first hand what was coming down the pike straight us. He hesitated, he flinched, and flailed, no doubt against the Republican ideology in his boss, until the circumstances were so dire that a chorus rose up to declare a “National Emergency”! This has been the hallmark legacy of the Bush administration and Republican led government.

And you know as well I, that the minority party in Congress, if it wants any of its own agendas to see the light of day, must make major concessions to the majority party on its agenda. Such was the case with the Gramm-Leach-Bliley Act, for those who actually read the bill before voting on it.

Unfortunately, most Congress people do not read the bills they vote on. The get crib notes from their staff, trusting that at least their staff read the bills and hopefully understood the short and long term consequences of the bill’s contents.

Posted by: David R. Remer at September 20, 2008 02:14 PM
Comment #263703

While we may be pulling back to truly conservative values, in that things like healthcare and education are deemed more important than buying the newest big screen TV, isn’t all bad. At least, that’s the way I see it. One positive of a depression, or economic regression, is that it focuses the mind.

Sometimes, I feel the need to ask, “Gee, you mean there isn’t a free ride after all?”

Posted by: googlumpuugus at September 20, 2008 04:39 PM
Comment #263710

Point well made and taken, googlumpus. Though a drop in big screen TV sales also puts people out of work.

The dollar figure estimate for the ‘toxic mortgage” debt to be bought out by the taxpayers has been issued forth in the neighborhood of $700 billion dollars. Which equates to around $2,333 in additional taxes for every American man, woman, and child.

If one breaks that cost out for only wage earners in America (assuming a labor force of 155 million), it results in an additional tax burden of $4,516 per wage earner.

I do not want to hear Obama or McCain ever say again during this campaign that they are going to lower taxes. That will either be a blatant lie, or, the idiotic plan of borrowing that money from China and other countries and wealthy investors, while passing the payback cost of that borrowing on to my daughter and all of our children and their children, as if they won’t have their own financial problems.

It is time we got some truth in advertising from these candidates or withhold our vote from them.

Posted by: David R. Remer at September 20, 2008 05:40 PM
Comment #263717

An economist speaks on Barack Obama:

“I’ve never worked with a campaign that was more interested in what the research shows.”

James Heckman, Nobel Laureate
University of Chicago

David - it all boils down to one candidate who will make decisions on personal ideology, and one who will make decisions based on the facts at hand. I think we both know which is which.

Posted by: Glenn Contrarian at September 20, 2008 08:30 PM
Comment #263722

To add a little balance.

Nobel Laureate Economists who have endorsed McCain’s economic plan: Gary Becker, James Buchanan, Robert Lucas, Robert Mundell and Vernon Smith. Becker, if you follow such things, is often called the world’s greatest living economic mind.

As for the bailouts, I don’t like them either. In fact, I’m furious about them.

But David’s calculation of $2,333 in additional taxes for each American (based on 700 billion in “toxic debts”) is incorrect.

The 700 billion dollars of bad debt we’re getting is just that—bad, risky, loans. While not worth 700 billion dollars, they’re certainly worth more than nothing, and we’re not going to be personally responsible for actually paying off every penny of those debts ourselves. Those debts are still backed up by some assets somewhere (real property, stocks, etc), and the debtors involved still owe that money. But they owe it to us now, the taxpayer, instead of to the banks. We’ll get a good percentage of it back. It just remains to see how much. Hey, if you’re an optimist, maybe we’ll see another housing boom and all get rich off these loans! (I’m kidding, course, but main point still holds).

Posted by: Loyal Opposition at September 20, 2008 10:16 PM
Comment #263728

L.O. -

Even Becker admitted he had not read the entirety of McCain’s economic plans, that he supports the plan even though he did not know its specifics.

Hm. But isn’t the devil in the details?

Here’s the general thrust of McCain’s ‘plan’:
His plan would control government spending by vetoing every bill with earmarks, implementing a constitutionally valid line-item veto, pausing non-military discretionary government spending programs for one year to stop their explosive growth and place accountability on federal government agencies.

‘Earmarks’ - He claims he’d save $100B per year by eliminating all earmarks…but the Dems pointed out that after one subtracted the money in earmarks for things McCain supports - like money for Israel, military construction, etc. - the total is about $16-18B.

‘Line-Item Veto’ - EVERY president since Reagan has wanted this…and Congress won’t give it to the president because it gives the executive branch too much power. Wishful thinking, L.O. - but it ain’t gonna happen.

‘Pausing non-discretionary government spending’ - The government grows - sometimes like a normal animal, and sometimes explosively like a weed or a cancer. A one-year pause would do nothing to stop “explosive growth”. It would reduce the level of spending, to be sure, but then that “explosive growth” would go right on happening. This is a mathematical principle of which each of the economist-letter’s signatories no doubt is aware.

‘Accountability’ - HA! Have you not been paying attention, L.O.? Have you seen ANY ‘accountability’ for government agencies supported by McCain - or Republicans in general - in the 26 years he’s been in office? It’s DEMOCRATS who’ve been beating the accountability drum!

IN OTHER WORDS, L.O., what McCain’s economic ‘plan’ is, is just a general statement with hardly any real specifics beyond more tax cuts (esp. for the wealthy) and firing the head of the SEC…

…and remember, we HAVEN’T SPENT A CENT of our tax money for the war in Iraq…because IT’S THE FIRST WAR IN AMERICAN HISTORY that we didn’t pay for ourselves - we’ve borrowed ALL of it, much of it from China and other countries.

We’ve spent over half a trillion dollars on an illegal war…and the bailout of the nation’s economy is about $700 billion. IF WE HADN’T INVADED IRAQ, WE COULD’VE WEATHERED THIS ECONOMIC MELTDOWN A HELL OF A LOT BETTER.

Way to go, Republicans and conservatives. You screwed America but good.

Posted by: Glenn Contrarian at September 20, 2008 11:44 PM
Comment #263735


David R.: I guess Robert Rubin didn’t read the bill either. Democrats didn’t read the bill so they are not responsible? Sounds like the same kind of lame excuse used to deny responsibility for voting to authorize force in Iraq.

I guess Phil Gramm just pulled the wool over everyone’s eyes? Give me a break. Keep defending the corruption. If you don’t vote for our corrupt bill, we won’t vote for yours. If you don’t vote for our bridge to nowhere, we won’t vote for your hippy museum at Woodstock.

While it is mostly true that the melt down of our financial system can be credited to The Financial Services Modernization Act, The basic philosophy of what the corporations want the corporations get from our politicians began decades ago. It hasn’t been contingent on whether Republicans or Democrats controlled the government. It will continue on into the future unless we rid ourselves of our current bunch of politicians and tell the new ones that this kind of governing will not be tollerated in the future.

If you vote for either a Democrat or a Republican it means that you condone what has gone on and hope for more of the same in the future. This election is not about the uncorrupt vs. the corrupt.

Posted by: jlw at September 21, 2008 01:43 AM
Comment #263743

Not Responsible? Of course they are responsible. Why do you think I founded vote out incumbents democracy?

What you are missing is that Democrats don’t have a problem with oversight and regulation, Republicans have had a very big problem with them. This has been a major ideological dividing line between them since the 1980’s.

And what you are trying to do is deflect from the topic of Phil Gramm being the sponsor of this debacle and his role as John McCain’s adviser.

Nice try. No cigar.

Posted by: David R. Remer at September 21, 2008 07:27 AM
Comment #263744

jlw said: “While it is mostly true that the melt down of our financial system can be credited to The Financial Services Modernization Act,”

And Phil Gramm was the chief architect of that bill. And Phil Gramm is the economic adviser to Sen. John McCain RIGHT NOW.

Sure there are other responsible parties, many, but none had so seminal role in THIS particular attack upon tax payer’s wallets present and future as John McCain’s adviser, Phil Gramm.

Posted by: David R. Remer at September 21, 2008 07:30 AM
Comment #263745

Glenn said: “We’ve spent over half a trillion dollars on an illegal war…and the bailout of the nation’s economy is about $700 billion. IF WE HADN’T INVADED IRAQ, WE COULD’VE WEATHERED THIS ECONOMIC MELTDOWN A HELL OF A LOT BETTER.”


Yep! There is no ignoring that opportunity cost any longer. Great point, Glenn.

Posted by: David R. Remer at September 21, 2008 07:32 AM
Comment #263746

Loyal Opp, that figure is an estimate and you well know that. That figure could be as low as 300 billion or as high 1.5 trillion dollars. It will depend on a great many factors. But Republican’s decisions continue to steal deeper deeper into future tax payer’s wallets by piling this national debt ever, and ever higher.

I wrote in 2003 or early 2004 that GW Bush would have us hunched over under 11 trillion dollars of national debt before he left office. I revised it later back to 10 trillion. My original estimate of 11 trillion is now on track as being the most accurate.

There is no rationalizing away the fact that Republicans have raised taxes on Americas over the last 8 years twice as much as all politicians in the entire history of this nation over 224 years prior. A literal doubling of the national debt in 8 years, and national debt equals taxes owed.

Republicans are dramatically and demonstrably the tax and spend Party. They just have a clever way of taxing Americans after they leave office by growing the national debt that must be paid by future tax payers. It is the truth. The numbers do not lie.

Posted by: David R. Remer at September 21, 2008 07:40 AM
Comment #263752

David and jlw -

On incumbents - actually, I do NOT blame the incumbent CONGRESSMEN who voted for the war, because they were lied to by Bush and Cheney. If you’ll check, Cheney even lied to the Republican House Majority Leader Dick Armey in order to get him to support the war. Armey - who could have been President Pro Tem - was initially AGAINST the war.

Not only that, when people think the nation is in danger, people look to the president. That’s not a political thing, that’s a HUMAN thing. We look to him and trust him to know what to do, and we rally behind him to give him our full support.

That’s patriotism.

Problem is, our patriotism was USED, and the American public AND the American Congress were lied to and manipulated into starting a war on false pretenses (again, see the above link) and wholly against the Geneva Convention. As a retired military man, I strongly feel Bush and Cheney should stand before the World Court at the Hague.

No, it wasn’t the incumbent congressmen and -women. It was the two men at the top, Bush and Cheney.

Posted by: Glenn Contrarian at September 21, 2008 10:32 AM
Comment #263759

Glenn, our Constitution designed the branches of government with very clear intent that CONGRESS SHOULD NOT trust the presidency.

Congress failed, Democrats and Republicans alike, the American people on the Iraq war. They had a duty and obligation by the very dictates of our Constitution to independently check the facts and hold investigatory hearings before such a radical and costly decision as going to war against a nation which posed NO imminent threat of attack against our nation.

I just cannot agree with your apologetic comments regarding the Congress which voted to give Bush the authority, which Constitutionally resides with the Congress, to declare or authorize funding for war.

Posted by: David R. Remer at September 21, 2008 11:52 AM
Comment #263790

Ralph Nader writes:

William Greider put it best yesterday when he called Treasury Secretary Henry Paulson’s upcoming bailout of Wall Street: “All sugar for the villains, lasting pain and damage for the victims.”

Yep!

Posted by: David R. Remer at September 21, 2008 04:33 PM
Comment #263806

http://en.wikipedia.org/wiki/Aig#Holdings

Perhaps this may ring true with some, perhaps some will ridicule the thought.

The link above points to the businesses controlled by the 18th largest company in the world. It is my meager understanding that the federal reserve now ownes almost 80% of AIG, and most would assume “We The People” are those owners.

Most here know the federal reserve is a private enterprise and “WTP” only pay the bills, but AIG/Federal Reserve holds many assets that generate revenue ie. insurance and property.

Why do we allow a private enterprise like the Federal Reserve to control this gem?

Perhaps this aquisition can work in WTP’s favor if we follow the model Alaska has put forth concerning the oil companies doing business there.

Every citizen in Alaska benefits from the oil industry in Alaska.

WTP can assume we own AIG and Freddy and Fanny and pay their bills if we allow the Federal Reserve to remain in control of our money, or WTP can profit from these same entities if we eliminate the middleman (the federal reserve) and follow the model Alaska has found profitable for many years.

Of course, we would have to make sure only the citizens of the United States benefit from this and not include the seepage from other countries.

Posted by: Weary Willie at September 21, 2008 07:20 PM
Comment #263852

David
I’m not saying it aint worth trying to avoid an economic meltdown. We need to do everything we can to avoid it for our youngin’s sake. And we need to act right now. Not after the elections.
Of course you and I both know that aint gonna happen. Most of that bunch up there in DC will still be there after the elections. If they aint motivated now, what makes anyone think they will be after the elections? Just changing the party in control aint gonna get anything done.
The only way to get that bunch motivated is for every incumbent up for reelection to lose their seat to a third party or independent candidate. And a third party or independent candidate take the White House.
Other than that we aint gonna do what it’ll take to avoid the coming economic meltdown. All we can do after that is try to minimize the damage as much as possible.

Posted by: Ron Brown at September 22, 2008 11:05 AM
Comment #263858

Give it up David. The people aren’t ready for such a needed change, they have accepted the false promises and Obama will win Nov. 4th.

The “economic melt down” may be delayed, but the journey to govt control of everything has been accelerated.

Posted by: kctim at September 22, 2008 12:27 PM
Comment #263878

Ron Brown said: “And we need to act right now. Not after the elections. “

Not if the hasty cure kills the disease and the patient, Ron. And that is the risk we run. Seen oil prices today? Direct result of the speculators anticipating the bailout of the financial sector at tax payer expense.

This is an incredibly complex set of problems we are faced with, and there are no simple solutions which can avoid creating more problems than they solve.

The solution requires at the very least, a wholistic long term end goal that extricates the nation and taxpayers from this situation, not a knee jerk response that is enormously expensive and fails to avoid creating even greater problems.

The proposal on the table is unconstitutional, seeks to prevent judicial review and immunize politician’s actions from judicial oversight and consequences, and writes a blank check to the executive branch for 3/4 of a trillion tax payer dollars, without the potential for Congress altering the executive’s choices in how that tax payer money is used.

You want corruption? The current proposal is rife with it.

Posted by: David R. Remer at September 22, 2008 02:35 PM
Comment #263879

kctim said: “The “economic melt down” may be delayed, but the journey to govt control of everything has been accelerated.”

The result of the private sector feeding at the taxpayer trough. The government is not the only responsible party here, kctim. If the private sector wanted government to stay out of its business, it should have decided decades ago to abandon greed as its primary motive, and the taxpayer as its rescuer and assistant in fulfilling its motive of greed.

Posted by: David R. Remer at September 22, 2008 02:39 PM
Comment #263880

David, who keeps putting the feed into the trough? Government. Why? Because they know they will eventually end up with control.
It worked with the people and now its working with business.
Progressive politics at its best.

Posted by: kctim at September 22, 2008 02:58 PM
Comment #263884

During the primary season I never heard even one republican advocate nationalizing private corporations as did Hillary who received nearly as many votes as Mr. Obama.

I will give Hillary credit in that at least she favored nationalizing companies who had more assets than debts.

The blame game continues with regard to our current financial crisis with each side trying to deny their part in this fiasco. As always, first we have politicians more interested in reelection than properly managing the business of government. Then comes the crisis…followed by the finger pointing.

I would ask the finger pointers to consider a looming problem on our national horizon that dwarfs what we are seeing today. And, we can still do something about it. Quote from the GAO “Long-Term Fiscal Outlook - April 2008.

“Our simulations were updated with the Trustees 2008 intermediate projections and continue to indicate that the long-term federal fiscal outlook remains unsustainable. This update combined with our analysis of the fiscal outlook of state and local governments demonstrates that the fiscal challenges facing all levels of government are linked and should be considered in a strategic and integrated manner.”

For the full pdf go here; http://www.gao.gov/new.items/d08783r.pdf

If the GAO report is to be believed, why is it that some advocate the establishment of another huge government entitlement in the form of national health care? Clearly, Social Security, Medicare and Medicaid in their present form and structure are not sustainable and will require huge tax increases, or benefit reductions, to keep them afloat.

Unlike our current problems which represent a crisis today, these giant entitlement programs represent a crisis at some unknown point in the future. Will we have the political will to do what is necessary in the near term to avoid the assured problems in the future. Do we really want to add another layer of entitlements on top of the failed ones we already have?

Since the current crisis will be managed by our present legislators there is little we can do to influence their decisions…we’re stuck with what we have in place as scary as that may be. I would ask all to reconsider their support for even bigger entitlements and the concomitant problems they will surely manifest.

Posted by: Jim M at September 22, 2008 03:42 PM
Comment #263891

kctim, and the voters keep reelecting them! Has nothing to do with progressive politics. It has to do with failing democracy. The voters are responsible for the actions of their representatives. If the voters choose not to hold them accountable on election day, then democracy fails. Because the ONLY reason the people were given the vote was so they could REMOVE politicians from office. The vote is entirely unnecessary if politicians are to remain in office: politicians will insure that without any need of voters.

You have to understand the chain of responsibility and accountability. We go through the motions of democracy in America today, but fail to act, in our voting behavior, in accordance with the duties and responsibilities attached to ever having given ourselves the vote in the first place.

It is however, not entirely a failed democracy. The Independent voters will be deciding our elections, and many of them at least, will vote out incumbents when government fails to produce the expected results. Whether there are enough independent voters willing to vote cross party and independent of Parties, to make a difference, is doubtful, however.

Switching majority parties in Congress and the White House, by itself, is not sufficient to force government toward more responsible and accountable policy and procedure.

Posted by: David R. Remer at September 22, 2008 04:54 PM
Comment #263893

Jim M, bravo for acknowledging the a part of the long term fiscal challenge facing us.

But, where were you when David Walker was protesting the Republican’s ignoring of the issues. You were a critic of David Walker then. Have you had a change of heart?

You asked: “why is it that some advocate the establishment of another huge government entitlement in the form of national health care?”

A nationalized health care system can actually save our nation’s tax payers from some of the projected imbalances. But, first, consider the options:

1) Privatize health care entirely and let those who can’t afford it suffer and die without health care access. (John McCain’s ultimate outcome if budgets are to be balanced and health care privatized.)

or 2) Find a way to insure that all Americans have access to quality needed health care, at the lowest possible cost so that our projected debt drops significantly to a sustainable level.

Option 2 is the only way! America is not going to stand by for the next 75 years and watch their parents and grandparents suffer and die needlessly for lack of affordable health care. You know this as well as I. It is a political reality that must be faced.

So, accepting that political reality, what is the cheapest way to provide affordable health care to all. The answer lies in NOT FOR PROFIT health care. Which means, not for profit health care insurance, which only the U.S. Government can provide given the size and amounts of such coverage. It means the government contracts with health care delivery organizations which operate on a non-profit basis, paying competitive salaries to health care professionals without paying shareholder profits or exorbident Executive Management salaries and golden parachute retirement packages whether the serve responsibly or not. Which means government provides preferential tax treatment to non-profit organizations and elevates taxes on for profit health care delivery organizations to incentivize a transition to non-profit health care delivery. Which also means no deep shareholder for profit pockets to sue for medical malpractice, which will reduce dramatically the incentives to sue health care deliverers for trumped up bogus claims.

Posted by: David R. Remer at September 22, 2008 05:12 PM
Comment #263898

David
Govt control is progressive politics. Doesn’t matter if its govt in control of lives so to keep the people re-electing the same politicians or bailing out businesses in order to dictate how they run. Its not the way our country is supposed to run, its the new “progressive” way.

I understand “responsibility and accountability” just fine, that is why I will not be voting for McCain, nor for Obama.
I’m sticking to my guns. Why others who preach responsibility and accountability won’t, is beyond me.

Posted by: kctim at September 22, 2008 05:33 PM
Comment #263901

kctim, government control of the military is progressive?

WOW! kctim. I had no idea. Government control of the treasury is progressive? Again, I had no idea.

Your comment is absurd on its face.

Posted by: David R. Remer at September 22, 2008 06:06 PM
Comment #263909

David Remer wrote; “Jim M, bravo for acknowledging the a part of the long term fiscal challenge facing us.” David, I don’t know what “the a part” means. Please explain.

More from David, “A nationalized health care system can actually save our nation’s tax payers from some of the projected imbalances. But, first, consider the options:”

David then gives two options, privatized or governmental health care. He then claims private plans will leave many to die and will cost more while citing governmental health care as possibly saving taxpayers money. That’s it, sign up for national health care or prepare to see many die in agony for lack of care.

David ignores the April 2008 report (I provided the link) by the GAO of the un-sustainability of the three big entitlement programs already in existence…namely, Social Security, Medicare and Medicaid and endorses the Granddaddy of them all, national health care. He offers no solutions to these current ever-growing threats and launches into the liberal scheme for even more. Liberals refuse to clean up the mess they have already made and want to spill even more taxpayer blood.

Either David is subscribing to magical thinking in believing that this entitlement will be different than the other three and not bleed red ink and require a constant infusion of new money or reductions of benefits, or…he believes such folly can be a tool for liberals to take over our entire economy and make everyone dependent upon political favor for their most basic needs.

From what I have read, the plan put into place in Mass. by Governor Romney and the legislature is working well and is actually providing care for all while not increasing the state budget. But for David and his fellow liberals, this plan does not give them control of the public purse and therefore has no merit.

It is difficult for me to imagine how one becomes so callous and indifferent to the consequences of another huge government entitlement program considering what we are going thru now.

Posted by: Jim M at September 22, 2008 07:35 PM
Comment #263916

Jim M said: “David then gives two options, privatized or governmental health care.”

Your reading deficiency is showing again. Nowhere did I say government would be replacing professional doctors, nurses and technicians. That Jim, is the hole your comment has its head buried in.

Reread what I wrote for understanding, then reply, and we can have an adult discussion of the issue.

Posted by: David R. Remer at September 22, 2008 08:52 PM
Comment #263917

Jim M, oh, and let’s not overlook the obvious. The privatized system is why 47 million Americans (and growing” now don’t have insurance and can’t afford ‘affordable’ health care, and are forced into emergency rooms on tax dollars at up to 600% of insured’s costs.

The privatized system is forcing public health care at tax payer expense through the emergency room care of everything from head colds to heart attacks.

Posted by: David R. Remer at September 22, 2008 08:56 PM
Comment #263967

Of course its “absurd on its face,” David, it doesn’t agree with what you want it to, so you attribute it to something else.
Not unlike your view on healthcare. You mention the “obvious,” but you only give one side of it so that it agrees with you. Of course healthcare is expensive, but a large part of the reason for that is because people abuse the system, like going to the ER for a head cold.

Posted by: kctim at September 23, 2008 10:11 AM
Comment #263976

David wrote, “Your reading deficiency is showing again. Nowhere did I say government would be replacing professional doctors, nurses and technicians. That Jim, is the hole your comment has its head buried in.”

Gee David, I didn’t say that either. Is there a mouse in your pocket?

David also wrote, “Jim M, oh, and let’s not overlook the obvious. The privatized system is why 47 million Americans (and growing” now don’t have insurance and can’t afford ‘affordable’ health care, and are forced into emergency rooms on tax dollars at up to 600% of insured’s costs.”

Please provide some factual information as to the folks liberals are citing in this 47M fairytale. How many are illegal aliens, 20-25 year old “children”, employees who refuse their employer health care plan as they don’t wish to pay premiums.

Most of all David, please provide the rationale for creating another huge government entitlement when the first three on the books are, or soon will be, unsustainable according to the GAO. Liberals have struck out three times in their schemes and now want a fourth time at bat.

National health care in the U.S. is a prescription for future huge bailouts, rationing of benefits, and all intrusive government regulations which will deny benefits to those whose life styles aren’t politically acceptable and worthy of care. Example: can you not see a day when those who use tobacco will be denied care, those who are too fat are denied care, those who are to wealthy will be denied care.

And, all the “fairness” talk we hear of today in our tax code with regard to those who have to much money will be employed to fleece the wealthy (by some arbitrary definition) to pay for someone else. And finally David, when the current three social programs are added to the new Granddaddy national health care, there will be no money left for any discretionary spending on education, poverty, emergencies and the beloved “pork”.

Posted by: Jim M at September 23, 2008 11:09 AM
Comment #264056

Jim M said: “but a large part of the reason for that is because people abuse the system,”


And exorbident profits are just a minor point not worth mentioning compared to a few thousand abusing the system, eh?

Absurd on its face.

Posted by: David R. Remer at September 23, 2008 07:47 PM
Comment #264057

“Governmental Health Care” were YOUR WORDS, Jim M. Own them. They are their for all to read.

Like I said, Government GS 12’s won’t be donning masks and doing surgery. Your comment’s comprehension deficit remains intact.

Posted by: David R. Remer at September 23, 2008 07:49 PM
Comment #264090

This discussion has veered far off track, but David, I began to question the validity of your original piece when you wrote this:

Make no mistake, for Sen. Phil Gramm to be successful in this effort required a Congress and President with the ideological belief that government oversight and regulation were an impediment to wealth creation and long term economic health. Gramm found such favorable views in a Republican controlled Congress and Pres. George W. Bush.

The legislation that Gramm pushed for was signed into law by Bill Clinton. Likewise, your argument that the damage had been done by the time the Democrats came into power, suggesting they are absolved of responsibility, ignores the fact that they worked to block reforms of Fannie Mae and Freddie Mac that were proposed by the administration in 2003. in fact, here’s what the NY Times reported at the time:

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Now we bemoan the fact that we didn’t watch more closely and that loans were foisted upon people who couldn’t afford them. Might we have missed a chance to prevent that and might the Dems have played a role? We can’t dismiss that possibility.

We need to be careful about selectively choosing or omitting facts when building our arguments, lest we perpetuate a system where decisions are based up biases and emotions rather than the truth.

Posted by: Paul Szydlowski at September 24, 2008 09:39 AM
Comment #264147

William Jefferson Clinton, 42nd President of the United States, actually explained the whole history of this the other night on Letterman:

http://www.youtube.com/watch?v=aGrvlrL_MNY

The current administration, aided by their allies in Congress, has done nothing to provide an opportunity for anyone to make money out of anything other than war and death and destruction.

Posted by: ohrealy at September 24, 2008 04:08 PM
Comment #264155

“Governmental Health Care” were YOUR WORDS, Jim M. Own them. They are their for all to read.

Like I said, Government GS 12’s won’t be donning masks and doing surgery. Your comment’s comprehension deficit remains intact.
Posted by: David R. Remer at September 23, 2008 07:49 PM

Thanks David, I needed to be reminded that there are some readers like you that must have everything spelled out for them to comprehend. Would any others who don’t understand what is meant by “Government Health Care” please raise your hands.

What I do find interesting in David’s criticism of my post is that he didn’t…or couldn’t, refute what I said.

Posted by: Jim M at September 24, 2008 04:29 PM
Comment #264195

Parts 1 and 2 of the Clinton appearance on Letterman are the ones more pertinent on the current financial situation:

http://www.youtube.com/watch?v=QqoVJktE4UY
clinton part 1

http://www.youtube.com/watch?v=1APM0o9cpW8
clinton part 2

Posted by: ohrealy at September 24, 2008 06:02 PM
Comment #264255

The topic is now centered around healthcare.

The economic melt down has been delayed.

This leads me to believe the economic melt down is not real, a manufactured “bubble” whose purpose is to get the Democratic Party back on track.

If the United States gets back on track behind the Democratic Party, we win!

If it doesn’t, we lose another four years while the Democratic Party tries again to gain control.

Do not fret, we will still be here when they make up their minds. We are the life blood of this country. The Democratic Party can’t do it without us.

Posted by: Weary Willie at September 24, 2008 11:00 PM
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