A Lincoln or Roosevelt moment?

The latest elections were remarkable for lacking surprise, no wonder many don't bother to vote!

The democratic machinery may be a little overrated to take us out of the many-decades-in-the-making slump. Somehow, the voters are still to figure this out, for this being one among the few dramatic swings, which otherwise would take several electoral cycles to happen, which shows that people still think they control the machinery by playing with a fake knob. Not to forget the enlightened skeptics, who may or may not vote, they think not much can be done anyway since the system is complex, as in don't bother to learn anything about it with the idea of improving. They hope, yet pass it for thinking, that somehow whatever it is they have been doing would keep them in their positions, while the world turns upside down round them. Of course, you recognize their ivory towers as skewers for the meat and vegetables exposed to the flame.

To return to major political/electoral swings, the one before was when we thought Obama and Democratic majorities would go for change. I guess, the 2010 swing is to appease the folk on the right, whereas the one before, in 2008, was to appease the left after 8 too many years of aggravation under Bush the lesser.

That we are going for a gamble has become obvious. It is not so clear how things will go from here. Internally, everybody is going to take a hit on everything they hold in cash--see the $600Bn as fuel for inflation eroding cash and confidence. Another way change will be effected internally is by virtue of the recommendations of the Obama's bipartisan debt-reduction commission.
"Cap revenue at or below 21% of G.D.P.”
“Lower Rates”
“Reduce the Deficit”

I read these to mean, status qvo on taxes and cut spending! The conservative approach towards taxes is to keep the elites happy, cutting the federal budget to size is to say 'swim or sink!' to the rest. The risk here is for the most people to perceive that budget cuts are somewhat unjust. If the twin issue of taxes & budget splits the electorate along the same line, I am afraid, it's time we reckon a Lincoln or Roosevelt moment in our nation.

But then again, we may also have war. No, it's not about Bush's open wars. For one, it could be economic war. The other countries are probably running through their options after the recent G20 in Seoul. Nobody wants to give up an inch, make it centimeter, or at least not in the open. If the Chinese-American relation gets rebalanced anew round an exchange rate, chances are that conflict is postponed. Otherwise, it's maybe wise to stock up on some trinkets; of course, I'm joking.

For another variant on the last point, brush up on your pre-1914 history. A good place to start may be here: Is globalization enough carrot...


http://www.huffingtonpost.com/charles-ferguson/the-financial-crisis-and-_1_b_782927.html said...

What unites the midterm election results, the recommendations of the bipartisan deficit reduction commission, the Federal Reserve's decision to spend another $600 billion to keep interest rates down, the failure to address the foreclosure crisis, and America's worsening relations with its G-20 partners? And, more generally, what explains the Obama Administration's toothless response to the financial crisis, in particular its reversion to status quo regulatory and economic policies over the past two years?

In making my documentary on the financial crisis, Inside Job, I obsessed over these questions. Some argue that President Obama, as a matter of individual personality, is averse to confrontation; others say that, lacking financial experience while being forced to confront the most severe crisis since the Great Depression, he was hostage to his campaign advisers, who happened to be Clinton-era insiders who had helped cause the crisis. Gradually, however, I have come to a different conclusion, one based on a more fundamental, structural problem in American politics.

My answer is this: far from being in an era of brutal partisan warfare, as conventional wisdom holds and as watching the nightly television news might suggest, the United States is now in the grip of a political duopoly in which both parties are thoroughly complicit. They play a game: they agree to fight viciously over certain things to retain the allegiance of their respective bases, while agreeing not to fight about anything that seriously endangers the privileges of America's new financial elites. Whether this duopoly will endure, and what to do about it, are perhaps the most important questions facing Americans. The current arrangement all but guarantees the continuing decline of the United States as a nation, and of the welfare of the bottom 90% of its citizens.

First, consider Obama Administration policy. The Federal Reserve is keeping interest rates down, which greatly enriches the financial services industry. The bipartisan budget commission, whose Democratic head is a former investment banker, recommended raising taxes on most Americans while reducing taxes on corporations. And while, to its rare credit, the Obama Administration has sought to repeal some of the Bush tax cuts for the wealthy, it has avoided any serious attempt to tax or control financial sector compensation, to recover any of the massive amounts taken by bankers during the bubble, to penalize or prosecute those who caused it, or to reverse the extraordinary rise in inequality that has transformed America over the last generation. The Republicans go even further in catering to the wealthy and the financial sector, but the differences are relatively minor.

The financial services industry and the most successful American multinational firms now obtain rapidly increasing fractions, often already the majority, of their investment, employees, and revenues from (a) other wealthy individuals and corporations and/or (b) outside the United States.

http://www.huffingtonpost.com/charles-ferguson/the-financial-crisis-and-_1_b_782927.html said...

Over the last two decades their political interests, contributions, and lobbying have gradually followed these larger trends. As a result, the political duopoly has overseen a massive disinvestment in the future of the United States and the American people, and a massive transfer of wealth from the bottom 90% of the population to the top 1%. Taxes on dividends, high incomes, capital gains, and estates have sharply declined, while tuition at public universities, hours worked per family, household debt, and government deficits have all increased.

And yet there is, obviously, real political fighting out there. Of what, therefore, do these vicious partisan fights consist? The two parties and their supporters attack each other on vague ideological grounds (big government, being a Washington insider, socialism, whatever), issues of personnel and power (holding up Obama appointments, redistricting, earmarks), or, more excitingly, with regard to social values issues dear to their bases: abortion, gay rights, don't ask, don't tell, sex education versus religion in schools, guaranteed-health-insurance-as-socialism, gun control, welfare, global warming. On these issues, each side can credibly tell its base that defeat would mean real losses. People do care about abortion and gay rights, for excellent reasons, and so many people on both sides grudgingly continue to participate in the charade.

The losers, of course, are the American people, and particularly America's younger generation. For at least the bottom half of the population, America's educational system is a disaster, with our high school graduation rate at 78 percent and declining (versus, for example, 96 percent for South Korea and over 90 percent for most developed nations); broadband infrastructure generally rated at about 20th in the world; and gradually deteriorating physical infrastructure. Quietly, as inequality has grown and the financial sector rose to political power, the wealthy in America have constructed increasingly separate, parallel, and private infrastructure systems for themselves -- elite private schools and universities, gated communities, private planes, the hedge fund universe.

The political duopoly arrangement, with its emphasis on intense fighting over values issues, serves to divert attention from the financial sector's "quiet coup," to use the economist Simon Johnson's phrase, and to divide potential opposition to it. People who should be aligned in calling for fairer taxes, campaign finance reform, stricter financial regulation, better public education, and investment in America's infrastructure are instead divided by their opposing views on gun control, abortion, and gay marriage. It is a strategy that has worked remarkably well for both parties.

Even so, the American people have begun to sense that the system is rigged, and the recent election results are partially a consequence of this. Fewer people are voting, more people are registering as independents, and voters are more willing to switch parties. Of course, as long as the duopoly holds, there is very little that they can do. The big question is: can it hold?

http://www.huffingtonpost.com/charles-ferguson/the-financial-crisis-and-_1_b_782927.html said...

Forming third parties and social movements in this kind of situation is difficult. The financial sector and the wealthiest 0.1% of the country have the twin advantages of great wealth and great cohesion. America's election districts, campaign finance arrangements, and voting rules discourage populist third parties whose base would be dispersed and, individually, not at all wealthy. At the same time, however, there are many precedents in American history for such a rebellion -- the Progressive movement, FDR's post-Depression reforms, and more recently the nonpartisan civil rights, feminist, and environmental movements. In my personal conversations, I sense an emerging consensus based on nothing more complicated than a sense of basic honesty, fairness, and common sense, qualities which the American people still have in abundance. Let us hope that this can be translated into some organized force that can put an end to the present political cartel.

Charles Ferguson is the director the documentary Inside Job, a documentary film about the financial crisis now playing in theaters nationwide. He holds a Ph.D. in political science from MIT.

Change you can REALLY believe in said...

Why the surprise? The U.S. thinks it’s still an international player despite the fact that it’s become a Third World craphole of corruption & fraud.

Go ahead and stick a fork in the USA: IT’S DONE!!!!
I’d like to see you swindling bastards try to invade your way out of THIS one.

ray l love said...

The MSM has failed once again to provide Americans with the information needed to understand what is happening. The two G-20 meets for example did not result in a ‘business as usual’ context as many Americans seem to believe.

Before the first meet, when the Fin Mins of Brazil and Indonesia chose to send subordinates, this was a symbolic protest. It was made important though by the fact that it was India’s Fin Min, instead of those protesting, who commented as to ‘why’. What he said essentially was that the G-20 is a waste of time. But what makes this important is the fact that India imports more than it exports, and so, India was showing solidarity among 2nd tier nations because it had little to gain or lose in regards to QE2. In other words, the solidarity itself is signaling that the ‘currency war’ is not just about currency, the 2nd tier nations were saying that they stand united against the US.(I’m using the term ’2nd tier’ because some of the nations involved are not among the G-20)

Another key clue that the MSM failed to recognize the importance of (they are more-so uninformed than devious), was when Brazil’s Fin Min., Guido Mantega, issued a joint statement with Brazil’s outgoing, and incoming Presidents, to the effect that Brazil is prepared to do whatever necessary to protect its currency from further appreciation(30% since March). This came after the first G-20 meet and after the Fed announced its QE2 intentions. At about this same time a rumor out of Brazil added another symbolic jab by claiming that 600 billion dollars might be bought with reals in the currency market(600 billion being the same number as the QE2 number[snarky]). And for another show of solidarity, the Fin Min in Thailand announced similar intentions in concert with a group of unnamed “neighboring” nations (the press sometimes confused some of these announcements with intentions to impose capital controls but Thailand already had such controls in place).

There were many other such clues but without making a long comment longer maybe it is best just to say that US domination of world affairs has ended. The MSM should be explaining what this means but instead we are now stymied by our own deceit.

According to Joe Stiglitz, for every dollar that the US spends on global development, it receives a return of $3. Yet many Americans actually believe that the global net flows are negative. As if a nation that represents 4% of the global population while owning more than half of all MNC stock has been dedicated to some sort of effort to feed humanity ‘Big-Macs’, and to improve their health with Coca-Cola etc. As if our militarism is somehow different than similar efforts of the past.

Americans have some difficult times ahead on many levels. Most of them don’t even know what terms like ‘dollar hegemony’, or ‘demographic dividend’ mean. Many Americans actually believe that they work ‘hard’… while many have never done anything other than what they wanted to do.

This would typically be the historical point when a people’s delusions about themselves lead to a major war, although, I suspect that Americans are too lazy and spoiled to be much of threat to any group larger than the Taliban. The Chinese are builders like the Germans. Our best hope is probably that of continuing to send them our processed food products, attack them with diet-related diseases.

Meanwhile, maybe we could regain some confidence at the expense of the Taliban, maybe, assuming we realize that they are provisioned via ‘our’ Afghan military recruitment efforts.

What a mess.

Anonymous said...

Leaders of the Pacific Rim economies that have spearheaded the still-fragile global recovery agreed Sunday to work toward building a regionwide free trade zone they say is the linchpin for sustainable growth.

From tiny Brunei to rising powerhouse China, the 21-member Asia-Pacific Economic Cooperation forum unanimously pledged to avoid raising more trade barriers and to roll back those they may have erected in the midst of crisis.

"We reaffirm our unwavering commitment to achieving free and open trade and investment in the region," the leaders said in a declaration released after their two-day summit ended Sunday. "We must take steps to build a foundation for stronger, more sustainable and more balanced growth in the future."

The show of unity contrasted with the discord over currencies seen days before at a Group of 20 summit held in South Korea. But worries over the frailty of the recovery seemed to lend urgency to the push for freer trade.

"The recovery is not solid, and imbalances are causing great uncertainty," Chinese President Hu Jintao told the other leaders, according to a text of his speech. "The employment situation in developed countries is grim, and emerging markets face inflationary pressures and asset price bubbles."

The leaders agreed to "take concrete steps toward realizing a Free Trade Area of the Asia-Pacific," according to their declaration, with Japanese Prime Minister Naoto Kan saying the rough target year was 2020.

Such a sprawling free trade zone — which would slash tariffs on imports of everything from automobile parts to food — would encompass all 21 economies, covering more than half the world's economic production and two-fifths of its trade.

This goal should build on regional groupings such as the Trans-Pacific Partnership, a U.S.-backed free trade agreement that nine APEC members are negotiating, and ASEAN Plus 3, which groups the 10-nation Association of Southeast Asian Nations with Japan, China and South Korea, the statement said. It would not be forged through APEC, which has no negotiating power.

But achieving such a huge free trade zone is a highly complicated endeavor given the region's diversity, vested interests opposed to opening markets, and broader sources of friction.

The U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join the TPP bloc, which currently brings together the small economies of Chile, New Zealand, Brunei and Singapore.

Cutting tariffs and reducing other trade barriers can boost economic growth by giving companies easier access to other markets, both to sell their products and to invest. Greater trade and investment can create jobs, but competitive pressures can also threaten livelihoods.

Japan has lagged behind its regional rivals in forging free trade deals and is seriously considering joining TPP despite strong opposition from farmers who worry that an influx of cheaper agriculture products would ruin them.

Anonymous said...

"Japan is determined to reopen itself," Kan told reporters, alluding to the historic role that Yokohama, which hosted the summit, played more than 150 years ago as one of the first Japanese ports to open up to the West.

Outside the convention center, anti-China protesters gathered by the hundreds for a second day Sunday, waving Japanese flags and holding placards insisting on Tokyo's claim to islands in the East China Sea at the heart of a long-simmering territorial dispute.

"We will protect Japan! "We will fight China! We will fight to the end!" the crowd chanted in unison. "Fight, fight, fight!"

Japan's foreign minister, meanwhile, urged China to reopen talks on developing natural gas deposits off the islands claimed by both countries. But his Chinese counterpart said tensions must cool before progress can be made, a Japanese Foreign Ministry official said on condition of anonymity, citing policy.

Kan likewise appeared to make no headway toward mending fences with China's president on that issue. He got even less traction with his complaints over a recent visit by Russian leader Dmitry Medvedev to an island in the northern Pacific that Soviet troops occupied in the closing days of World War II.

The dispute over that territory has prevented Tokyo and Moscow from ever signing a peace treaty, and Medvedev told Kan that he has the right to go there whenever he wants.

Like Japan, others in the region are wary of China's growing might and its increasingly aggressive stance on various issues. But despite such tensions, they all appear committed to knitting the region closer together for the sake of maintaining its robust and resilient growth.

The summit's declaration also noted a need to reduce trade imbalances and government debt. It also includes a pledge to move toward more "market-determined exchange rate systems" — alluding to the tensions that flared at the G-20 summit.

Washington contends that China's currency, the yuan, is significantly undervalued, giving Chinese exporters an artificial advantage in overseas markets and contributing to the huge U.S. trade deficit. China and some other countries have slammed the U.S. for printing money to help spend itself out of recession, a policy they say is driving the value of their own currencies higher, flooding their markets with excess cash and fueling inflation.

For the first time, the leaders approved a strategy calling for balanced, sustainable and innovative growth both in the region and within their own borders. Countries should provide better access to credit and social services for women, the poor and other vulnerable groups, it said.

They also intend to improve energy security and reduce carbon emissions that contribute to global warming.

APEC's next summit will be held in Honolulu, Hawaii, with the 2012 gathering due to move to Russia's Far East city of Vladivostok.

Anonymous said...

Kevin Rothstein
Oceanside, New York

The late comedian George Carlin, when asked why he does not vote, stated that our country was bought by the wealthy a long time ago, and it was useless to think that one could change the system through the electoral process.
The one group whom the people used to depend on to represent their aspirations, Liberals, in exchange for access to the elite, sold out the middle and lower classes decades ago.
If only most Americans would stop voting against their best interests, if they would not give in to the fear and paranoia that the far right uses to tear people apart, then maybe we can begin to heal our nation and stop the deterioration of our social fabric.
Compromising with those who only wish to destroy you, as President Obama appears to be doing, is a recipe for disaster, with the victims once again being the American people

http://www.nytimes.com/2010/11/22/opinion/22krugman.html?src=ISMR_HP_LO_MST_FB&pagewanted=print said...

November 22, 2010
There Will Be Blood

Former Senator Alan Simpson is a Very Serious Person. He must be — after all, President Obama appointed him as co-chairman of a special commission on deficit reduction.

So here’s what the very serious Mr. Simpson said on Friday: “I can’t wait for the blood bath in April. ... When debt limit time comes, they’re going to look around and say, ‘What in the hell do we do now? We’ve got guys who will not approve the debt limit extension unless we give ’em a piece of meat, real meat,’ ” meaning spending cuts. “And boy, the blood bath will be extraordinary,” he continued.

newspaper reader, USA said...

I work on Wall Street, I'm a Democrat, and I read the financial news each day. I understand what Republicans are doing to the bottom 98% percent of Americans better than most. They are destroying democracy itself and our children's future and turning this country into an anti-democratic oligarchy.

It troubles me greatly that liberal media does not grasp how conservative financial propaganda (a la Milton Friedman) is being used as a blueprint for the cruelties dealt upon the American people by Congressional Republicans.

And it's clear the White House hasn't a clue.

For instance, Friedman/Republican propaganda preaches that government assets should be privatized. Hence, Gov. Christie in New Jersey, like the national Republicans, is searching for ways to privatize as much of what is currently held, and done, by government as possible.

Privatizing assets held by government simply means that one rich person, or one wealthy corporation, will make and keep the profits by operating what was formerly a public asset instead of the people at large. Privatize the New Jersey Turnpike? If so, one person or company makes a profit from commuters using it every day to go to work instead of the government, i.e. you and me. Oh, you say, the turnpike's not making a profit now and so is costing the state money instead of adding to our coffers? Okay, so increase revenues and fix the situation, don't sell it! The same is true for social security, Medicare, health care, etc.

Republicans want your government privatized because they know the few will get even richer as they exploit the people and it is only those few--the top 2% in net worth--that they serve.

Warren Buffet appeared on CNBC recently and said the 400 richest Americans listed in Forbes magazine earned an average of $ 348 million EACH last year, and paid individually an average of 17% each in federal taxes. Despite the fact that they were all in the highest NOMINAL federal tax bracket, after deductions, their average EFFECTIVE tax rate was 17%! (Buffet's comments were reported...nowhere...outside of CNBC.)

That means an individual American earning $ 60,000 annually shares his effective tax rate with the 400 richest Americans. Yet the Republicans say the rich pay too much in taxes and the American people nod their collective heads and agree. Lies!

Tax policy is about how much you keep AFTER taxes, not how much you pay. By promoting propaganda that focuses on how much in taxes the rich pay, Republicans distract you from seeing how much they keep.

newspaper reader, USA said...

Raising the effective tax rate on multi-billionaires to 50% means they would have to subsist on an average of $ 174 million per year. Such an increase would bring in an additional $ 45 billion into the federal treasury--from just 400 people! If we raised the effective rate to 50% on the richest 2% of Americans--six million in all out of 310 million people, i.e. those who earn $ 1 million or more from all sources, we could erase our annual deficits and run surpluses immediately. And we would not have to raise a dime from those who earn $ 999,999 per year or less.

Major American corporations--the Fortune largest 1000--pay only 10% of all tax monies paid annually into the federal treasury, or 2% of GDP. That is down from 6%, or 32% of all tax monies paid into the federal treasury in 1952. This amounts to a great "opting out" by major corporations from funding the federal government. The result is we now borrow an average of 15% of all monies taken in to fund the federal government (which, of course, covers the amount no longer taken in from major corporations), and which forces us to pay interest-on-interest as we sell greater amounts of US treasuries to foreign sovereign funds and wealthy individuals to finance our annual shortfalls.

This payout of interest on borrowing redistributes wealth UPWARD from the poorest 98% of Americans to the richest 2% since they are the principal purchasers of treasury debt. It also represents a bleeding of wealth out of the country to China, Japan and the Middle East, which is where most of our national paper is held. Finally, since much of the activities of the US departments of State and of Defense have been privatized, corporations and contractors principally benefit from the
$ 768 billion spent on defense and foreign activities, meaning that fully 40% of federal outlays flow UPWARD to the richest 2% of the population (since the richest 1% among us own 83% of all stocks).

The federal government has become an enormous engine for redirecting taxpayer monies up to the rich, who contribute only 17% of their income to inflows. Hence, the enormous spread between rich and poor.

We must stop Republicans from cutting/privatizing discretionary govt. spending and we must RAISE taxes on rich individuals and wealthy corporations NOW or the bottom 98% will just get poorer.

Oh, and someone please wake up the White House, the media, and Democrats. Nap time is over.

fCh said...

Little did I know about a month ago when I wrote about the possibility of a Roosevelt/Lincoln moment.

Right now, is seems as if are headed towards a boiling moment, http://community.nytimes.com/comments/www.nytimes.com/...

from here also, said...

I take it that we have no chance for change. Obama's middle name could be status qvo, just as well. By 2012 one can say, Der Mohr hat seine Schuldigkeit getan, der Mohr kann gehen. Moreover, by the time we are ready to inflate another bubble the Chinese may well be #1.

fCh said...

"President Obama agreed to a tentative deal to extend the Bush tax cuts, part of a package to keep jobless aid and cut payroll taxes."

Those disappointed or surprised by the President's turn, should recall the Jeremiah Wright moment, and how Obama dropped his relation with the Reverend like a hot potato. Who's the hot potato now, the progressive left?

In any case, the moment may well be Lincoln/Roosevelt-ian, yet Obama falls short.

Andrei Vorobiev said...

I've seen this kind of half-measures and compromises done before. The place was the Soviet Union. The years were 1982-1991.

And then there was no Soviet Union...

Andrei Vorobiev

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