Devolution of Economy
As It's Spun Out of Control
October 10, 2008
I feel. I believe. Emotion and faith are all there is to fill an otherwise empty head. Since 1968 they’ve taken down all of the New Deal but social security, which they’ve undermined by spending the trust fund to enrich the peers of their class: the investors in MISC and privatized critical government services. The rise of private armies, like Blackwater Security, are an innovation of the past seven years. They're even more dangerous than usurious parasitic “industries,” like private for profit banks, have been for centuries. The service has declined as the cost and profits have risen. None of the neoliberal theories has worked, yet they continue to preach the credo of Free Market Friedmanism. Milton said the test of a scientific theory is the outcomes it allows you to predict. Well economics is no science to begin with and only Milton could fail to see that the closer we get to implementation of his delusions the closer we come to total failure. Yet he remains the hero of conservatives and libertarians. They feel they must keep the faith.
On This Week, Sunday 10/5/08, George Will said that Sarah Palin would do well to represent Joe Six-Pack but, “. . . she shouldn’t try to replicate him!” And they call Obama, their minds occluded by typical conservative/libertarian projection, elitist.
Amy Goodman of Democracy Now on 10/8/08 introduced, “. . . David Cay Johnston, . . . His latest book is titled Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill). He is also author of the bestselling book Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else.”
Speaking of the bailout on DN Johnston said, “This is a bigger free lunch than even I imagined.” Wouldn't Milton by surprised to know that he was even wrong about lunch.
During a G4 [UK, France, Germany and Italy] Press Conference France's conservative president, Nicolas Sarkozy, was asked why Europe had refused to put up E400G to coax bankers to unfreeze credit. He said he wasn’t part of the decision but wouldn’t have supported it, because, while he supported entrepreneurship, he opposed speculative capitalism that created the crisis. He said the free market must be tempered by morality, which must be enforced by law and the government lest unbridled greed create problems like these.
10/8/08, in unprecedented coordination, “In an attempt to stem the
worst global financial crisis since the 1930s, the central banks of
the United States, the Euro zone, Britain, Switzerland, Canada and
Sweden all lowered official rates by a half-percentage point.”
Radio Australia “The People's Bank of China, participating for the first time in a
globally coordinated interest-rate move, also lowered its key rate,
but by a more modest amount.
“The Bank of Japan, with rates at just zero-point five percent, did not move lower, but strongly supported the coordinated action.
“Hong Kong slashed the borrowing rate it charges banks by a full percentage point, a day after Australia's central bank delivered its biggest interest rate cut in 16 years, also a full point.”
Undaunted by reality, conservatives and libertarians sought to blame the inevitable consequences - of the stupidity and greed of the economic elites and their politicians and bourgeois minions - on poor and working class Americans. William Poole, former head of the Federal Reserve Bank of St Louis and representative of The CATO Institute, in recent conference aired on C-SPAN, said that the problem is the failure to recognize the credit risk of too much subprime paper. Of course the libertarian perspective must overlook the cumulative effect of the mindless invisible hand of avarice, to focus on the victims of the pyramid scam of MBSs and CDSs. He asked why we make these mistakes over and over. [ed. We're supposed to infer that the attempt to help those in poverty is the culprit. The real criminals of the wealthy class wish to remain unconscious to the fact that their desire to have much more than average is impossible to achieve unless many have less. At the same time they desire that outcomes not be tainted by government interference. They wish to imply that it's only in the interest of sound neoliberal economics and a desire for the well being of all, that they have everything, and we descend into debt slavery to them forever.]
They won’t understand that the pyramid scams that feed their greed must inevitably collapse. Instead they try to blame the marks - in this case 90% of Americans. Only 40-60% of US were excluded by the grandeur of the economic elites from American Dream in 1968. It was about then that Milton Friedman’s articulated rationalization, for the avaricious delusion of the ruling class, began its corrosive influence on government policy.
The more privatization, which is supposed to reduce government and its price, the higher the costs and the larger the government presence and debt. Look at contracted services that bill the government for sending out a fire pumper and ambulance for every fender bender. If they find an injury when they arrive on the scene, they call a second private ambulance. Thus the government is billed three times for one incident and the profits of the investors and higher cost are the real, not theoretical result of privatization. Look at the empty trucks KBR sends on round trips within Iraq. The contractors over there either do nothing or cheat. They bill US both ways. It doesn't bother them at all that the lives of our children [their children are not soldiers] or those of their employees are lost. [Their children aren't employees either.] The gamble is worth it for the profitable payoff. Privatization works for all but the soldiers and workers, who risk IED sudden death to move our money into investors pockets by the empty truck load.
Deregulation is crime forgiven before the act. Suppression of wages to increase profits at home and on outsourced products is the right of owners, a property right, defended by Bush and other free market pirates, that results in devaluation of the dollar. Derivatives, which enriched investors and the CEOs who ran the scam for them, have caused inflation and the credit crisis. Both cause concentration of wealth with fewer and fewer but the conservatives and libertarians won’t acknowledge that the problem is their too big piece of that illicit pie. C-SPAN’s been airing Oversight and Government Reform Committee hearings [Oct. 6,7, 2008] on Lehman and AIG failures. The pie eaters and their supporter/peers in congress, like Shay and the rest of the Repus in Waxman’s hearing, divert attention to borrowers.
Lynn Turner, former chief accountant SEC ‘98-‘01, said in the hearing, that $58 trillion [after excessive leverage] in derivatives like MBSs and CDSs have been floated. The CEO of AIG was asked where the $61G of the $85G govt loan/buyout that had been drawn so far had gone. Diane Watson D - CA asked if the money was spent to pay out to anxious investors. CEO said yes. - So the investors who profited god knows how many times over their principal [capital] while the scam ran, now want their original stake and its projected increase made good by US. Those whose greed ruined our economy and impoverished the rest of US now get to have their cake and eat it too, while we’re told to eat cake.
If there are 100M housing units in America worth an average of $150k each, that’s $15 trillion, about one fourth of the supposed value of the derivatives to which the con artists have admitted. I’ve heard estimates up to $100 trillion. But no more than ten percent of these home “assets” [which you also count as your asset] are at risk. Maybe as much as $1.5 trillion of bad loans are attributable to irresponsible consumer borrowing, mitigated by the con artists whose loan shark pitch was employed to broker the debt. That's not near the up to $15 trillion in loans the banks leveraged into $58 trillion+ in bad debt secured by imaginary [derivative] assets. To blame the consumers, who were conned so these criminals could collect fees then turn around and use the same homes as collateral for 10 -100 times the aggregate debt is absurd. The next conservative standby is to blame the $10 or 11 trillion in government debt they’ve run up to fatten contractor and MISC [Military Industrial Security Complex] looters of America. They don’t want to hear about the up to $100 trillion the banks and investment houses have created on their worthless paper. They never look at the real numbers but only those that support their ideological delusions and vane principles, which reinforce their sense of personal value and desire for our goods. Their childish selfishness, speciousness and dogma are a threat to our survival.
So the derivatives are the mechanism by which the financial industry has leveraged their ability to borrow (in excess of the collateral assets) by ten to a hundredfold. That debt has been turned into investor’s profit and executive compensation, even if they’ve lost real money to do it. And thus the wealth has been concentrated and 90% or more of US are taken down, while the criminals who profited are bailed out. But the libertarian conservatives still insist we must continue the perversion of game theory by their refusal to allow interference with “outcomes.” George Will reiterated that last Sunday [10-5-08] and the Repu congressmen repeated in harmony as their unified contribution to the hearing. When they must see the damage done, some of them allow that more regulation is needed. Not much though and that will be shed as soon as things quiet down a little. Even now they're chanting in unison that the borrower/victims of the fraud and Fannie and Freddie are to blame. There’s no sincerity or honesty in them. They just want what the want. They want it all. The thing they don't want is consciousness of their evil foolishness.
During the debate, 10/7/08, McCain said, “. . . the match that lit this fire, was Fannie Mae and Freddie Mac. . . .”
David Cay Johnston - DN 10/8/08; http://www.democracynow.org/2008/10/8/debate - commented, “Well, the senator from Arizona’s description of the facts is just extraordinary for being a fact-free zone. Fannie Mae and Freddie Mac never originated a single loan. They certainly are participants in what went on here, but the problem was caused by this notion of, quote, 'deregulation.'
“. . . if you can package a loan, securitize it [ed. MBSs, CDSs and other 'derivatives'] and then sell it to places like the pension funds that you and I support with our tax dollars for public employees, then what do you care if the loan goes bad, especially if you get big fees and especially if the more toxic the loan is, the less likely it is to be repaid, the bigger your fees? That’s what deregulation has meant, and that’s what’s brought us to this pass. . . .”
Milton Friedman didn’t believe in zero sum reality. “The most important single central fact about a free market is that no exchange takes place unless both parties benefit.” - Milton Friedman - Freedom, Economy, Partnership, Profits and “Most economic fallacies derive - from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another” - Milton Friedman. His specious pronouncements didn’t point out that, though the business dealers all won, the rest of US lost. Ninety percent of US lose to all of the swindlers involved in any financial deal. If you can’t see through Friedman’s speciousness, you’re a bigger fool than he was. But all the free marketeers, while rejecting zero sum, the heart of game theory, insist that noninterference by government in “outcomes” [a game theory term that describes the result of zero sum interactions] among the “agents” is the only way to play the game – as long as they're winning.
The association of territoriality with private property [Robert Ardrey] is as specious as any other support for the theories of free market capitalism. [an oxymoron]. Friedman’s grotesque neoliberal revival of Adam Smith is more flawed than the original delusion of “liberal economy.” The result has been regression of the Human Race towards feudalism, seen in the re-concentration of wealth, for the past forty years - or the past 240 w.r.t. The Wealth of Nations, which set off a monstrous growth of finance and colonial monopolies that concentrated wealth in England. Perhaps a few new hands [entrepreneurs- the real capitalists are old hands at ripping off the public] got in on the act. Forty years, 240 or 6000, most people have suffered so a few could live in luxury. The closer we get to Milton’s ideal the worse things get for most of US. Of course the rich like things just as they are and have become. Look how we fools rush to their aid with $700G when they feel their second billion may be threatened. We forced them to threaten US with not loaning back what they’ve stolen from US – and what we need to live.
All private property was at one time in the public domain. It was privatized over the millennia. In reality, large property owners must be seen to hold the public’s land and improvements in trust. That which is required for the common well being of the Human Race can not unqualifiedly belong to individuals or privately owned corporations. For instance, air and water must be deprivatized quickly. You say the air hasn’t been privatized? To paraphrase Frank Herbert, he who can destroy a thing owns it. Capitalists have betrayed the implicit trust given them with the property they’ve destroyed, including our economy. What they’ve taken from US for their personal hoard, must be returned to its rightful owners, we the people. Property on which we are dependent for our lives must be seen as public property. - No! That doesn't include your home or your car or other personal property. Wake up fool!
We’ve entrusted our survival to those who recognize no responsibility to our community. “So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not” - Milton Friedman
They hold our property as their own. They profit from our work on “their” property. and have renounced our rightful claim to that which we must have to live. They take no responsibility for the betrayal of our trust and claim the privatized property is their property and that property rights take precedent over reason, decency, any consideration of our well being or that of our country, or even our very lives. If we allow their twisted notions of private property to rule, they will hoard what we need to support life itself. They'll allow nothing that doesn’t increase their profits to exist. It’s their right to property versus our right to life. You need no more proof of that than the sale of our livelihoods to China, through outsourced industries, for the profit of a few rich parasites and their bourgeois managers and wholly owned politicians and government.
And now more than ever it's seen that their system doesn't work. An economy that works for less than ten percent of the population is broken. It's born of a flawed theory that never could have done other than to concentrate wealth with the few, at the expense of we the many.
By what mechanisms have the public domains become private property? Any realistic discussions of sane and healthy alternative economies, must begin with that question.
I'll feed myself and provide other necessary resources so that I may continue to write.
A G Kaiser