What do we hear from the movers and shakers? Still, austerity.
Greece is imploding, and even if moderates win this Sunday, it's unlikely that they'll be able to force Germany's Angela Merkel to abandon her stance: austerity as the solution to all their economic ills. Spain is now the problem de jour: another bank/bonds crisis, but again, European bonds, the only interim solution, are nixed by Merkel.
Merkel has her reasons. Germans have their history as justification: the Weimar Republic collapsed under inflation that saw the mark tumble to over 1 trillion to the dollar, wiping out the middle class. After that, the Nazis took over.
Ironically, but also logically, some of the beneficiaries of the austerity-driven depression that's overtaking Europe's periphery are politicians of the extreme right, like Greece's neo-Nazi Golden Dawn.
If Germans could realize that their resistance to meaningful bailouts and stimulus to create growth is creating little Weimar's all over Europe, perhaps they'd re-think their reluctance.
Angela's conservatives are in the driver's seat in Europe. In the US, conservatives are in a similar position, even though they don't control the federal government. The tea party dominated Republicans control the House, and effectively stymie any stimulatory policy in the Senate: 41 votes out of 100 = a blocking minority. Plus, by controlling a majority of states, Republicans are able to lay off public employees wholesale--partly to balance budgets, but partly because unionized public employees are the only organized group left that can counter their lock-step promotion of corporate and wealthy/selfish class interests. Conservatives see public employees as "the greatest threat" to the US economy. However, the net effect of state (and local) layoffs has been to offset any growth in employment in the private sector, one of the prime reasons why unemployment went up a notch last month.
Given their antagonism to public employees, it's not surprising that Republicans refuse to allow the major Federal grants (stimulus expenditures) necessary to prevent the layoffs or hire back the teachers and police needed.
The US doesn't have the equivalent of Greece's Golden Dawn or its left-wing Syriza, but Republican intransigence and Democratic waffling surely justify them.
Instead, we have the Koch brothers, Karl Rove and the millionaire/billionaire funded super-pacs on one side, and only the weakened Occupy movement on the other. So, our equivalent of the Nazi takeover of Weimar would put corporations and their owners in control.
Why "only" the Occupy movement? Tom Barrett, the defeated old-line Democrat in Wisconsin is your answer. Centrist resistance may win barely enough votes in the General Election against Koch-Rove billions, but what people really yearn for is the kind of policy (only more so) that Obama campaigned on but only half-delivered. Incremental measures aren't solutions.
Even with Obama, the 1%, or the Selfish Class, face little resistance to their takeover. Long-term depression could result, paralleling the history of the late Roman Empire.
Showing posts with label Stimulus. Show all posts
Showing posts with label Stimulus. Show all posts
Thursday, June 14, 2012
Sunday, August 15, 2010
The G-20 and the Secret Police
I'm writing from Kitchener, Ontario. I was talking to a Canadian about how our government system (doesn't) work: he was amazed.
Ontario, was where the G-10 met. People are disturbed by what happened. The Liberal provincial government instituted secret police powers during the meeting, enabling the police to round up anyone they thought might make trouble--pre-emptive detention. Hundreds were imprisoned, simply for being in the wrong place at the wrong time. Apparently, almost anyone with a Quebec license plate was suspect.
There is much feeling here, especially in Montreal, that the G-20 has usurped the functions of the UN, and is little more than a conspiracy of the Great Powers to control the world, economically, militarily and politically. Montrealers have a point. As they see it, the powers were meeting to agree to cut services everywhere, in the face of the "Great Recession," and to protect the wealthy and large corporations, which have rebounded from the 2007-2008 debacle, while leaving most people behind (with large and rising unemployment). Obama was virtually alone in arguing for the need for more stimulus so that the largest economies could generate the employment needed to escape from the recession. He didn't come away with much.
So, back to the G-20 meeting: remember the clips of burning police cruisers? The provincial police abandoned scores of police vehicles on the streets. Another Ontarian remarked: they never abandon police cruisers. This was a set up, so the crazies could come and trash them, the media could get pictures of the destruction, and people could be persuaded that the police crack-down was necessary. Some are convinced that the crazies were either police saboteurs, or were encouraged by them.
Increasingly, it does look like a general consensus among world elites: let unemployment stay high; work your workers harder, don't hire, invest in laborsaving technology, instead. In addition, cut taxes on the wealthy, or, in the case of the US: keep them low, with the Bush tax-cuts.
There is one fly in their ointment, in the US, which brings us back to the crazy American system of government. Even if Tea Party Republicans gain seats, they won't be able to extend the Bush tax cuts: that would take 60 votes in the Senate--unless we let the Democrats sign on.
If the tax cuts expire, there will be a revenue bonanza. What progressives need to do is use that as leverage--for stimulus programs.
In the US, we have the makings of a true class struggle: the very rich against everyone else; tax cuts for people who already have enough--and refuse to invest in jobs--or money for jobs and a true greening of America. But in order for this to happen, a majority of Democratic Senators needs to realize: they could be popular heroes, if they only took a chance.
Otherwise, the Selfish Class has won: worldwide.
Ontario, was where the G-10 met. People are disturbed by what happened. The Liberal provincial government instituted secret police powers during the meeting, enabling the police to round up anyone they thought might make trouble--pre-emptive detention. Hundreds were imprisoned, simply for being in the wrong place at the wrong time. Apparently, almost anyone with a Quebec license plate was suspect.
There is much feeling here, especially in Montreal, that the G-20 has usurped the functions of the UN, and is little more than a conspiracy of the Great Powers to control the world, economically, militarily and politically. Montrealers have a point. As they see it, the powers were meeting to agree to cut services everywhere, in the face of the "Great Recession," and to protect the wealthy and large corporations, which have rebounded from the 2007-2008 debacle, while leaving most people behind (with large and rising unemployment). Obama was virtually alone in arguing for the need for more stimulus so that the largest economies could generate the employment needed to escape from the recession. He didn't come away with much.
So, back to the G-20 meeting: remember the clips of burning police cruisers? The provincial police abandoned scores of police vehicles on the streets. Another Ontarian remarked: they never abandon police cruisers. This was a set up, so the crazies could come and trash them, the media could get pictures of the destruction, and people could be persuaded that the police crack-down was necessary. Some are convinced that the crazies were either police saboteurs, or were encouraged by them.
Increasingly, it does look like a general consensus among world elites: let unemployment stay high; work your workers harder, don't hire, invest in laborsaving technology, instead. In addition, cut taxes on the wealthy, or, in the case of the US: keep them low, with the Bush tax-cuts.
There is one fly in their ointment, in the US, which brings us back to the crazy American system of government. Even if Tea Party Republicans gain seats, they won't be able to extend the Bush tax cuts: that would take 60 votes in the Senate--unless we let the Democrats sign on.
If the tax cuts expire, there will be a revenue bonanza. What progressives need to do is use that as leverage--for stimulus programs.
In the US, we have the makings of a true class struggle: the very rich against everyone else; tax cuts for people who already have enough--and refuse to invest in jobs--or money for jobs and a true greening of America. But in order for this to happen, a majority of Democratic Senators needs to realize: they could be popular heroes, if they only took a chance.
Otherwise, the Selfish Class has won: worldwide.
Tuesday, August 10, 2010
The Budget War and the War War
Paul Krugman decries the deficit hysteria, but even he doesn't make much of the connection between our turning off the streetlights (literally) and the Wars, and/or "Defense."
How much do we spend on Defense every week? Between $26-27 billion. What do we get for it? Two horrendous wars that are going nowhere, and over eight hundred bases abroad in nearly 140 countries. Probably half that money is going out of the country, and most of the rest supports industries that are working on what are effectively cost-plus contracts to produce things that will kill, or enable people to kill, many people.
Employment in civilian sectors costs half as much per worker as defense industries. If the same money were spent on infrastructure, or on human services like teaching, twice as many could be employed. So, a good part of the unemployment problem could be solved if defense spending were radically cut and the savings spent on domestic needs. Further, more of the money would stay in the US.
When we have to turn off streetlights, cut back on police, gut local school staffs, we are, as Krugman points out, screeching in reverse. Our nation will be the poorer for all these austerities.
Growing debt could conceivably become a problem at some point, although right now, US government bonds still sell easily at extremely low interest rates. So, as Krugman--and I in my earlier blog--have pointed out, now is not the time to be worrying about high deficits; we need to really stimulate the economy, not just stabilize it and say the job is done.
But, the huge amount of money going to defense could finance real domestic needs. If the world needs a policeman, let the world community step up; why should the US alone? Further, our world policeman role has had few positive effects in the last 50 years. We caused the Middle East and East Asian conflagrations by our interventions to install the Shah in Iran, to create Islamist opponents to leftist Afghans, and to buttress a corrupt regime in Vietnam.
Everyone (except a few large corporations) would have been a lot better off if we had kept our hands to ourselves. We meddle virtually everywhere, and create enemies even in Europe because of it.
So, the best way to stimulate the economy and answer the howls of the deficit hawks at the same time is to withdraw, not just from Iraq and Afghanistan, but from most of those 850 odd bases all over the world, and to stop equipping our military with high-priced toys that make them think they can overawe the world.
Looking at history, however, the above seems unlikely. It certainly didn't happen in Rome--until it was forced on her by defeats. That will happen to us, unless we withdraw on our own terms. Now.
How much do we spend on Defense every week? Between $26-27 billion. What do we get for it? Two horrendous wars that are going nowhere, and over eight hundred bases abroad in nearly 140 countries. Probably half that money is going out of the country, and most of the rest supports industries that are working on what are effectively cost-plus contracts to produce things that will kill, or enable people to kill, many people.
Employment in civilian sectors costs half as much per worker as defense industries. If the same money were spent on infrastructure, or on human services like teaching, twice as many could be employed. So, a good part of the unemployment problem could be solved if defense spending were radically cut and the savings spent on domestic needs. Further, more of the money would stay in the US.
When we have to turn off streetlights, cut back on police, gut local school staffs, we are, as Krugman points out, screeching in reverse. Our nation will be the poorer for all these austerities.
Growing debt could conceivably become a problem at some point, although right now, US government bonds still sell easily at extremely low interest rates. So, as Krugman--and I in my earlier blog--have pointed out, now is not the time to be worrying about high deficits; we need to really stimulate the economy, not just stabilize it and say the job is done.
But, the huge amount of money going to defense could finance real domestic needs. If the world needs a policeman, let the world community step up; why should the US alone? Further, our world policeman role has had few positive effects in the last 50 years. We caused the Middle East and East Asian conflagrations by our interventions to install the Shah in Iran, to create Islamist opponents to leftist Afghans, and to buttress a corrupt regime in Vietnam.
Everyone (except a few large corporations) would have been a lot better off if we had kept our hands to ourselves. We meddle virtually everywhere, and create enemies even in Europe because of it.
So, the best way to stimulate the economy and answer the howls of the deficit hawks at the same time is to withdraw, not just from Iraq and Afghanistan, but from most of those 850 odd bases all over the world, and to stop equipping our military with high-priced toys that make them think they can overawe the world.
Looking at history, however, the above seems unlikely. It certainly didn't happen in Rome--until it was forced on her by defeats. That will happen to us, unless we withdraw on our own terms. Now.
Saturday, July 31, 2010
Deflation Looms
My realtor tells me my mother's house is losing 1% of its value every month. That's not because it's falling down; we've spent almost $200,000 to renovate it. It's not because the neighborhood is going downhill, either. The land around it is held by people whose deeds, or zoning, restrict them to one house only, and across the road land is preserved through a conservation easement, allowing no additional houses.
No, the price is going down because there are too many houses and too little money--in the local housing market. And what's happening here is happening elsewhere even more dramatically. That's why so many homeowners are "underwater," and walking away from their homes. Many of them can't find jobs, so, foreclosures are increasing and a record number of people have been forced from their homes.
Foreclosures build downward pressure on house prices: banks try to unload the houses they're stuck with.
There are short-term fixes, such as renegotiating mortgages, or allowing defaulting owners to rent in the interim: both would reduce the number of under-priced houses flooding the market, but the first isn't working--many don't have jobs, or have declining earnings--and the second has hardly been tried.
Falling prices might be a good thing for someone with money, but the reason for it is: most people have too little: it's called price deflation.
Price deflation can be self-reinforcing, i.e. can trigger a downward spiral. Lower prices mean businesses make less in profits. A home-builder, for example, will have to lay off his workers, because he can't sell the houses he builds, or has to sell them at cost, or less. He's losing money, so he lays off workers, or goes out of business, which increases unemployment, so fewer, still, have money. That drives prices even lower.
Even some inflation hawks on the Fed Board of Governors are warning of deflation danger. The Fed sets a goal of moderate inflation (2-3%), which keeps the economy moving, but deflation could stop the economy dead in its tracks. It happened in Japan in their "lost decade," it happened in the Great Depression and it could happen now.
It happened in the last two centuries of the Roman Empire, too, and was a major contributor to its fall. There it happened because the wealthy, accumulated almost all the wealth, hoarded gold and evaded taxes. Here, sharp traders threaten speculation against government borrowing, borrowing needed to stimulate world economies.
The financial industry is like those Roman Senators hoarding gold. Since more demand is needed, and since interest rates are basically zero, the Fed could create more money, buying up treasuries, to curb deflation. More focused would be a government stimulus targeted on creating jobs in the public investments we need.
The latter isn't likely in this corrosive political climate, but the former could be rendered worse than useless if big banks still prefer gambling to loans.
No, the price is going down because there are too many houses and too little money--in the local housing market. And what's happening here is happening elsewhere even more dramatically. That's why so many homeowners are "underwater," and walking away from their homes. Many of them can't find jobs, so, foreclosures are increasing and a record number of people have been forced from their homes.
Foreclosures build downward pressure on house prices: banks try to unload the houses they're stuck with.
There are short-term fixes, such as renegotiating mortgages, or allowing defaulting owners to rent in the interim: both would reduce the number of under-priced houses flooding the market, but the first isn't working--many don't have jobs, or have declining earnings--and the second has hardly been tried.
Falling prices might be a good thing for someone with money, but the reason for it is: most people have too little: it's called price deflation.
Price deflation can be self-reinforcing, i.e. can trigger a downward spiral. Lower prices mean businesses make less in profits. A home-builder, for example, will have to lay off his workers, because he can't sell the houses he builds, or has to sell them at cost, or less. He's losing money, so he lays off workers, or goes out of business, which increases unemployment, so fewer, still, have money. That drives prices even lower.
Even some inflation hawks on the Fed Board of Governors are warning of deflation danger. The Fed sets a goal of moderate inflation (2-3%), which keeps the economy moving, but deflation could stop the economy dead in its tracks. It happened in Japan in their "lost decade," it happened in the Great Depression and it could happen now.
It happened in the last two centuries of the Roman Empire, too, and was a major contributor to its fall. There it happened because the wealthy, accumulated almost all the wealth, hoarded gold and evaded taxes. Here, sharp traders threaten speculation against government borrowing, borrowing needed to stimulate world economies.
The financial industry is like those Roman Senators hoarding gold. Since more demand is needed, and since interest rates are basically zero, the Fed could create more money, buying up treasuries, to curb deflation. More focused would be a government stimulus targeted on creating jobs in the public investments we need.
The latter isn't likely in this corrosive political climate, but the former could be rendered worse than useless if big banks still prefer gambling to loans.
Thursday, July 22, 2010
Tax Cuts For the Wealthy
That seems to be the refrain of conservatives, Republicans and Tea Party activists: they advocate making the Bush tax cuts permanent. Yet, at the same time, they rail about the admittedly huge government debt. Making the tax cuts permanent, would, it's estimated, increase government debt in the next ten years by well over $2 trillion. And Boehner, the House Republican leader, actually said the tax cuts don't have to be paid for!
Republicans are attempting to gain political traction with the "all debt is bad" crowd, while also currying favor with wealthy fundraisers, and indulging in the you-can-get-it-for-nothing thinking that created the disastrous 2007-8 collapse.
Cutting taxes has stimulated the economy, and increased revenue in some limited situations. It worked with JFK's tax-cuts, because tax rates were very high then (they are very low now), and their reduction made money available for consumption and therefore created incentives for investment (from the added spending boosting demand). They didn't work so well from Reagan through Bush II, because wages did not keep pace, increased consumption was based on adding to private debt; foregone taxes benefited the wealthy, who saw "investment" opportunities in financial speculation, or foreign production. So, the famous Bush tax cuts doubled the US debt, and led to speculative excess that caused the collapse.
Obama's stimulus spending has almost doubled the debt again, but without the stimulus we'd be calling this a Great Depression, not a Great Recession. Maintaining tax-cuts for the wealthy would create greater deficits, but would not stimulate the economy. Why? Banks and individuals are sitting on hoards of cash already, rather than investing, because there is little demand for new production: investment in the face of low or shrinking demand is usually considered foolhardy.
Conservatives have an ideological rationale for high-end tax-cuts: encouraging investment and cutting down the size of government. The former works in limited instances, but won't work now. As for the latter, when in power conservatives have increased government size, while still cutting taxes--hence creating structural deficits, i.e. deficits in good times.
A deficit in bad times is a natural outgrowth of need--people need support and can't pay taxes when unemployed--and partially counters the decline in demand: it is an investment for better times. A deficit during a boom is like living high on your credit card.
Tax cuts to the wealthy, now, would inflate speculation, but would not increase consumption enough to stimulate growth. They would balloon the deficit even further. They might also, finally, drive the world away from the dollar as world reserve currency: Americans would have demonstrated their financial recklessness once again. (The US caused the global downturn by encouraging out of control speculation).
Flight from the Dollar could end the American Empire as we know it.
Republicans are attempting to gain political traction with the "all debt is bad" crowd, while also currying favor with wealthy fundraisers, and indulging in the you-can-get-it-for-nothing thinking that created the disastrous 2007-8 collapse.
Cutting taxes has stimulated the economy, and increased revenue in some limited situations. It worked with JFK's tax-cuts, because tax rates were very high then (they are very low now), and their reduction made money available for consumption and therefore created incentives for investment (from the added spending boosting demand). They didn't work so well from Reagan through Bush II, because wages did not keep pace, increased consumption was based on adding to private debt; foregone taxes benefited the wealthy, who saw "investment" opportunities in financial speculation, or foreign production. So, the famous Bush tax cuts doubled the US debt, and led to speculative excess that caused the collapse.
Obama's stimulus spending has almost doubled the debt again, but without the stimulus we'd be calling this a Great Depression, not a Great Recession. Maintaining tax-cuts for the wealthy would create greater deficits, but would not stimulate the economy. Why? Banks and individuals are sitting on hoards of cash already, rather than investing, because there is little demand for new production: investment in the face of low or shrinking demand is usually considered foolhardy.
Conservatives have an ideological rationale for high-end tax-cuts: encouraging investment and cutting down the size of government. The former works in limited instances, but won't work now. As for the latter, when in power conservatives have increased government size, while still cutting taxes--hence creating structural deficits, i.e. deficits in good times.
A deficit in bad times is a natural outgrowth of need--people need support and can't pay taxes when unemployed--and partially counters the decline in demand: it is an investment for better times. A deficit during a boom is like living high on your credit card.
Tax cuts to the wealthy, now, would inflate speculation, but would not increase consumption enough to stimulate growth. They would balloon the deficit even further. They might also, finally, drive the world away from the dollar as world reserve currency: Americans would have demonstrated their financial recklessness once again. (The US caused the global downturn by encouraging out of control speculation).
Flight from the Dollar could end the American Empire as we know it.
Tuesday, July 6, 2010
Heat and Idiocies
It's high 90's; the humidity is climbing. We try to shelter in our cooler houses, go to air-conditioned movies, or are almost thankful we're at work in air-conditioned offices.
It's hot here in the northeast.
Do people ever consider the plight of people in places like Baghdad? There, the temperatures soar into the 120's and 130's, and, in the city, where you'd expect air-conditioning, most people consider themselves lucky if they get a few hours of electricity.
Why? Before the US invasion, Baghdad had power outages, but electricity was generally available. The US, back in 2002, was going to make things better for the Iraqis, by driving out Saddam Hussein. We drove him out; his own people executed him. Meanwhile, Baghdad suffers heat we can hardly imagine. It has no air-conditioning, because when we invaded, we destroyed their power plants. Many billions of dollars later, many power plants have not been successfully repaired, nor the distribution system.
Meanwhile, American troops in their big bases have air-conditioning, hot and cold running water, all the amenities. Probably, in most forward operating bases, Americans enjoy air-conditioning and hot showers.
But the Iraqis do not.
The story is probably similar in Afghanistan, except that there was less to destroy, so Afghans may be less worse off after our invasion than the Iraqis.
What have our invasions accomplished? In Iraq, we got rid of a bad guy, who had been a CIA client, and we also killed a lot of people, destroyed a lot. We so totally destabilized the society that we had to stop a civil war. It could break out again once we leave.
In Afghanistan, we drove the Taliban from power, restored education for girls in a very few places, and put in place an ineffectual government that is one of the most corrupt on the planet. We also killed (and continue to kill) many Afghans, both combatants and non-combatants. But we failed to destroy the Taliban. Despite its unpopularity, Afghan majorities now believe it will return to power in some form; they also want the US and NATO to leave, because we're repeating Vietnam: destroying villages "in order to save them."
Which Afghans want us to stay? The ones who have grown fat on US contracts, or US-funded bribes, are maintained in power by our military, or are allied with those who are: a small minority.
Why do we stay--in either place?
Is it because our military craves large budgets and opportunities for promotion? Is it because defense contractors sell larger and larger contracts?
Meanwhile, the long-term unemployed can't get jobs, and the Senate refuses to extend their benefits--because of budget deficits. The largest discretionary budget item is Defense: $680,000,000-1,300,000,000. (Social Security/Medicare is larger, but self-funded and not discretionary).
Our best plan for a stimulus would be: cut bases worldwide and get out of both wars; spend the money at home.
It's hot here in the northeast.
Do people ever consider the plight of people in places like Baghdad? There, the temperatures soar into the 120's and 130's, and, in the city, where you'd expect air-conditioning, most people consider themselves lucky if they get a few hours of electricity.
Why? Before the US invasion, Baghdad had power outages, but electricity was generally available. The US, back in 2002, was going to make things better for the Iraqis, by driving out Saddam Hussein. We drove him out; his own people executed him. Meanwhile, Baghdad suffers heat we can hardly imagine. It has no air-conditioning, because when we invaded, we destroyed their power plants. Many billions of dollars later, many power plants have not been successfully repaired, nor the distribution system.
Meanwhile, American troops in their big bases have air-conditioning, hot and cold running water, all the amenities. Probably, in most forward operating bases, Americans enjoy air-conditioning and hot showers.
But the Iraqis do not.
The story is probably similar in Afghanistan, except that there was less to destroy, so Afghans may be less worse off after our invasion than the Iraqis.
What have our invasions accomplished? In Iraq, we got rid of a bad guy, who had been a CIA client, and we also killed a lot of people, destroyed a lot. We so totally destabilized the society that we had to stop a civil war. It could break out again once we leave.
In Afghanistan, we drove the Taliban from power, restored education for girls in a very few places, and put in place an ineffectual government that is one of the most corrupt on the planet. We also killed (and continue to kill) many Afghans, both combatants and non-combatants. But we failed to destroy the Taliban. Despite its unpopularity, Afghan majorities now believe it will return to power in some form; they also want the US and NATO to leave, because we're repeating Vietnam: destroying villages "in order to save them."
Which Afghans want us to stay? The ones who have grown fat on US contracts, or US-funded bribes, are maintained in power by our military, or are allied with those who are: a small minority.
Why do we stay--in either place?
Is it because our military craves large budgets and opportunities for promotion? Is it because defense contractors sell larger and larger contracts?
Meanwhile, the long-term unemployed can't get jobs, and the Senate refuses to extend their benefits--because of budget deficits. The largest discretionary budget item is Defense: $680,000,000-1,300,000,000. (Social Security/Medicare is larger, but self-funded and not discretionary).
Our best plan for a stimulus would be: cut bases worldwide and get out of both wars; spend the money at home.
Monday, May 17, 2010
Politics, Economy: Does Anything Work?
The bank bailout and stimulus package worked--up to a point. While the former did rescue the banks, and the latter spared us the depths of the Great Depression, neither has "fixed" the economy.
The big banks made money, but mostly on speculation with the cheap (almost free) bailout money, but they haven't been lending enough to genuinely rescue the economy. In fact, there is a real danger that bank speculation could trigger a worse financial collapse, unless Congress passes laws empowering government to regulate the whole financial industry. Because of widespread American distrust of government, however, and because of intense bank lobbying, re-regulation of the finance industry is difficult to get through Congress (banks were much more regulated before the wave of deregulation that began with Carter and Reagan, and continued through Clinton and Bush administrations).
Further, the stimulus was too little. While some millions of jobs were saved, and something less than that were created, the number of jobs lost, and the number of jobs needed is far larger, so the stimulus limited the damage, but didn't go far enough. The stimulus also saved the housing market from collapse: it is slowly recovering, but many are still losing their homes to foreclosure, many of those due to job losses, many others because house values plummeted and mortgage holders were left "underwater," owing more than their houses were worth.
No wonder people are unhappy and grasp for "solutions," like the Tea Party movement. Ironically, the solutions offered: abolishing the Fed, going back to the gold standard, free marketeering, abolishing regulations already in place, would make things worse.
The gold standard would drastically reduce the money supply, which would destroy more jobs; further deregulation would permit more speculation by the banks, which may be why the tea party is so well-funded, but it would further reduce the money available for job creation. And budget-balancing would subtract still more.
The real problem (Dollars and Sense: May-June, 2010), is that the whole global trading and financial system is seriously out of whack: the dollar no longer works as the world's reserve currency, which requires the US as importer of last resort, a high dollar, imports of goods, exports of dollars and the destruction of US manufacturing. This creates huge trade deficits, consumer debt, high finance and high unemployment.
What is needed: regulate finance and reduce its importance, revive manufacturing (especially to combat climate change), an active government in the economy, a low dollar, not a high one, and a new international reserve unit to replace the dollar.
This might end America's imperial hegemony, but we've already gotten to the point where we can't afford it; it has destroyed the US economy. The jobs we most succeed in creating, wreak destruction world-wide. We'd be much better off as "just another country." Otherwise, we might end like the Assyrian Empire: brilliant, brutal and short.
The big banks made money, but mostly on speculation with the cheap (almost free) bailout money, but they haven't been lending enough to genuinely rescue the economy. In fact, there is a real danger that bank speculation could trigger a worse financial collapse, unless Congress passes laws empowering government to regulate the whole financial industry. Because of widespread American distrust of government, however, and because of intense bank lobbying, re-regulation of the finance industry is difficult to get through Congress (banks were much more regulated before the wave of deregulation that began with Carter and Reagan, and continued through Clinton and Bush administrations).
Further, the stimulus was too little. While some millions of jobs were saved, and something less than that were created, the number of jobs lost, and the number of jobs needed is far larger, so the stimulus limited the damage, but didn't go far enough. The stimulus also saved the housing market from collapse: it is slowly recovering, but many are still losing their homes to foreclosure, many of those due to job losses, many others because house values plummeted and mortgage holders were left "underwater," owing more than their houses were worth.
No wonder people are unhappy and grasp for "solutions," like the Tea Party movement. Ironically, the solutions offered: abolishing the Fed, going back to the gold standard, free marketeering, abolishing regulations already in place, would make things worse.
The gold standard would drastically reduce the money supply, which would destroy more jobs; further deregulation would permit more speculation by the banks, which may be why the tea party is so well-funded, but it would further reduce the money available for job creation. And budget-balancing would subtract still more.
The real problem (Dollars and Sense: May-June, 2010), is that the whole global trading and financial system is seriously out of whack: the dollar no longer works as the world's reserve currency, which requires the US as importer of last resort, a high dollar, imports of goods, exports of dollars and the destruction of US manufacturing. This creates huge trade deficits, consumer debt, high finance and high unemployment.
What is needed: regulate finance and reduce its importance, revive manufacturing (especially to combat climate change), an active government in the economy, a low dollar, not a high one, and a new international reserve unit to replace the dollar.
This might end America's imperial hegemony, but we've already gotten to the point where we can't afford it; it has destroyed the US economy. The jobs we most succeed in creating, wreak destruction world-wide. We'd be much better off as "just another country." Otherwise, we might end like the Assyrian Empire: brilliant, brutal and short.
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