Thursday, October 15, 2009

2000-2008 WHAT HAPPENED TO OUR ECONOMY AND WHY

Outsourced jobs, loss of investment value in the stock market, rapid increases in gasoline and food prices, loss of equity in homes, foreclosures, inflation, steep decline in the value of the Dollar. Dramatic increase in national debt. ·

Stock market bubble in 2000 burst (irrational exuberance!)

Real estate bubble, led by sub-prime mortgages, burst ·

Oil price bubble · Food commodity price bubble · Gold price bubble

A bubble is a result of unregulated speculation and possible manipulation in financial markets. Why not regulate bubble speculation? We did … from the time of the Stock Market crash of 1929 until 1999, when a Republican Congress’ repeal (signed by Bill Clinton) of the Glass Steagall Act (that regulated financial markets and kept banks, insurance companies, brokerage firms, and investment banks separate from each other) allowed financial services to merge and removed regulations on speculation. But the repeal didn’t happen overnight. From the days of Reaganomics, free market advocates … led by Alan Greenspan…, typically Republicans, “lobbied” Congress morning, noon, and night to deregulate markets… make them free markets. (“Free market” thinking asserts that free markets are best for economic growth.) What is Congress’ record on deregulation? Congress has deregulated energy (can you say Enron, WorldCom, Computer Associates?), financial services (do you still have a home?), airlines (the skies are not very friendly lately), and telecommunications (can you hear me???)

So let’s take a break for a story. I attended an executive management program at The Wharton School of the University of Pennsylvania. The professor explained that ultimate power (which I define as the ability to do what you want when you want to and get what you want when you want it) is the ability to change the rules! So now it should come as no surprise to you that what has been described as deregulation is actually re-regulation…. changing the regulations by those who were supposed to be regulated to be favorable to them. Believe it or doncha, they actually wrote the legislation and paid (they call it contributions and such) senators and House representatives to vote it into law. Like making it more difficult (impossible) for people to file for bankruptcy or charging interest rates on credit cards that would embarrass the Mafia And now you know the rrrrest of the story.

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LEFT vs. RIGHT: The Real Story ... Part I


The current healthcare debate has brought opposition from out of the woodwork from Birthers and Deathers and 9-12'ers to the Tea baggers, Town Hallers and anti -government crowd and the “We have to get the Republicans back in power” crowd. At the end of the day, whether it's health care or energy policy or restoring a sane financial system, and the other damage caused by the last 8 years of the Bush administration or the last 40 years since the Regan administration, there are several recurring themes that the Democrats continually fail to recognize and address with the American public. Their continued failure to define the argument makes it extremely difficult for them to compete successfully on the political stage with an opponent who has branded them as “tax and spend liberals”, “anti- business”, and “big government”. Democrats must take these charges head on to be effective.

Theme #1. Business good.... government bad. There is absolutely no truth to either side of this idea. A high percentage of businesses fail; publicly traded companies frequent miss their revenue and earnings targets, their stock prices suffer. Their stock holders lose investments. Their employees get laid off and this is a common occurrence. Small businesses are no better. There are a high percentage of failures among small businesses and the dirty little secret is that many would not survive and or only exist for the purpose of funneling their personal expenses through their business. Whether it is big businesses going offshore to avoid taxes or small businesses laundering their personal expenses, cheating is cheating.

On the other hand, there have been many significant successful programs at the Federal government level that were beyond the ability of business or the desire of business to make the huge up front investment. For example, the Tennessee Valley Authority, land-grant universities, the interstate highway system, and the westward growth of the US, through the Federal government's support of the railroad industry.

Theme #2 The cries of socialism that come from the anti-government crowd. The programs in reality are economic development. The argument that these programs are socialism fails to recognize what socialism really is … a system where government owns the means of production and government makes the decisions for what’s produced and how it is distributed. In this country, we have between 12 and 25 million small businesses … the higher number representing part-time, some home businesses, and eBay sellers. Capitalism is deeply ingrained in every nook and cranny of our economy … and conversion to socialism is virtually impossible.

In the South during the Depression, where the poverty rate was extremely high and farmers could barely eke out a living, the government created the Tennessee Valley Authority to provide electricity to the poor dirt farmers to level the playing field and provide what the city dwellers had for decades. Still that program also met with the familiar cries of “too much big government” and socialism. How many of today’s Birthers, Deathers, and 9-12'er ‘s don’t remember that their great granddaddies and granddaddies finally got electricity to their farms by a massive Federal government economic development program that has allowed the South to prosper.

Many of these same anti-government people and/or members of their families have also attended land grant universities in he United States that were initiated by the Federal government to level the playing field with elites who had the finances to go to Harvard, Princeton and many other private schools. Their affordable education was subsidized by taxpayer dollars, not as a big government program, but as economic development. Just one more huge success by a government of the people, by the people and for the people.

The interstate highway network could have never been undertaken by private industry and yet many of these same people live in towns that have prospered from motels, restaurants, Wal-Mart’s... The same could be said of the government's role in creating successful railroads to allow the expansion of the United States.

Theme#3 Free markets are better than socialism. But we don't have free markets and we don't have socialism. The argument has never been about one versus the other ... it has been about where the boundaries of free market economics are. Unfettered free markets are unrestrained and favor business interests at the expense of the public interest. Ironically, the followers of the leading advocate of unfettered free markets, Ayn Rand, probably don't know that she wasn't an economist, but a novelist, and her books were fiction. Her model has never been implemented.Without the appropriate regulation, the public is at the mercy of business. Alan Greenspan has finally admitted that businesses will always cheat and has even said that he underestimated the level of greed that has been at the root of our current economic crisis. We have always been a modified market system of capitalism; when the government sets monetary policy in the interest rates....affecting the price of all transactions, that represents one of many ways in which those that want to protect an unfettered free market system are wallowing in a myth. There have always been many government programs to protect the public by establishing the appropriate boundaries to allow for economic development on the one hand and the interest of the public on the other.

Our problem is that our government, our founding fathers form of democracy, and our economic system have been hijacked in broad daylight by four oligarchies ... the financial, pharmaceutical, energy (oil) , and insurance industries ... The Four Horsemen of the Apocalypse. And far too many members of Congress are on their payroll. Too many Americans are preoccupied with Oprah and or sports or just don't care.

To sum it all up, either the Dems choose leaders with the will to aggressively take on the Republican myths, or Pelosi, Reid et al will continue to suffer the public’s buy in to the Republican’s myths.

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