Crisis

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There’s a good Op-Ed by Bob Herbert this morning. It seems Conan O’Brien has been having fun making fun of Newark, NJ. Behind that laughter lies a nation full of urban tragedy. Our cities, as usual, are ignored and continue to suffer.

Here’s a couple comments, expressing better than I can how tragic this situation is:

I don’t know about Newark, but in college I had the opportunity to live four months in Dakar, Senegal, a city which we like to define as “third-world.” Back then I had this idea that I needed to see what “poverty” looked like. However, upon returning and moving to metro Detroit, I can see that there was no need to go half so far. Dakar is far better off than Detroit, with a comparable literacy rate (60%), fewer drugs, and far less violence. In parts of Detroit, poverty/unemployment/crime rates are through the roof, streets are abandoned, every other house is burned or falling in, every window broken, and empty sky scrapers crumble, condemned and overgrown with plants. You can’t believe it until you’ve spent time there.

Detroit is in appalling condition. I would never have believed that the United States of America, which brags and blathers so hard on the world stage, would allow such unthinkable destitution. The country that offered me so much privilege and even led me to assume that poverty was always elsewhere, that children were hungry in China and Africa but never here five minutes away, offers neither safety nor opportunity to so many children in Detroit.

Yet on every TV station there are self-worshiping blowhards in suits and ties frothing at their audiences of nervous middle-class mice about America, the “greatest country on earth.” What makes America great? Dakar is a wonderful place with serious trials and significant suffering, but also a lot of hope and spirit. Detroit is a toxic wasteland by comparison.

I share your concern, Mr. Herbert. But I don’t think Conan O’Brien is really the one in need of reprimand. In fact I almost appreciate his comments, for bringing at least a little attention to America’s dark secrets, and maybe even a little levity.

Thanks, m.s. from southeastern michigan.

And here’s another comment. This one from Kate Madison of
Depoe Bay, Oregon:

…”So what are we doing? While mulling the prospect of sending up to 40,000 additional troops to Afghanistan, we’ve stood idly by, mute as a stone, as school districts across the nation have bounced 40,000 teachers out of their jobs over the past year.”

YEAH! Conan O’Brien’s act is kind of like laughing at the funeral of a brutally murdered child–horrifying but understandable only as an act of total denial! WHAT IS WRONG WITH US that we are willing to think about sending many more of our young people into the horrific war in Afghanistan–denying completely that most will come home with PTSD (if they survive), just as they did in Iraq and Vietnam! Yet…..we LAUGH about the terror and poverty in a place like Newark that probably produces as much PTSD in its deprived, abused children as Afghanistan and Iraq combined!

Let us face it! We are a narcissistic, spoiled country, and we do not wish to see what is right in front of us everyday! If we did, we would never have let it happen in the first place!!!

Well, maybe we wouldn’t have let it happen, but it wouldn’t have been a sure thing, given inherent human selfishness.

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Taxes are way too low in this country. They need to be raised, but only on the high income groups, and raised somewhere around where they were during our great post-World War 1 economic boom.

Here’s why:

Bob, while I agree with you, and respect Felix Rohatyn greatly, his being “one of the biggest supporters of the creation of an infrastructure bank” does not answer the question of whether the government (we) can afford it.

I’ve recommended readers subscribe to John Mauldin’s weekly E-Letter before. http://www.frontlinethoughts.com… While I disagree with Mauldin’s politics (Republican) and almost of his socioeconomic policies and prescriptions (e.g., blasting Obama on national healthcare), to get economic facts he offers a concentrated and readable dose for free. This past Friday’s letter begins: “As of this week, total US debt is $11.3 trillion and rising rapidly. The Obama Administration projects that to rise another $1.85 trillion in 2009 (13% of GDP) and yet another $1.4 trillion in 2010. The Congressional Budget Office projects almost $10 trillion in additional debt from 2010 through 2019. Just last January the 2009 deficit was estimated at ‘only’ $1.2 trillion.” Mauldin goes on to explain why this is an optimistic set of estimates, followed by data on Europe and “The Global Recession Gets Worse” that reminds of Mr. Brooks’ image today of the “disembowelment scene in ‘Braveheart.'”

Mauldin asks where is the money going to come from?
“The world is going to have to fund multiple trillions in debt over the next several years. Pick a number. I think $5 trillion sounds about right. $3 trillion is in the cards for the US alone, if current projections are right.” He then talks about why bond rates are rising in what appears to be a deflationary period and concludes this thought with “I think the bond market is looking a few years down the road and saying that $1-trillion deficits are simply not capable of being financed. And if the debt is monetized, then inflation is going to become a very serious issue.”

As much as I dislike Republicans, sometimes we have to know what the analytical and thoughtful among them are saying. Mauldin is not a Bush, or Cheney, or Limbaugh. The irony is that while his facts appear to be sound, and pale yours today, he never seems to even realize that he’s making an argument for national healthcare, a wealth tax, slashing military spending, and in various ways coming up with enough funds for such as an infrastructure bank.

Way down deep — perhaps not all that deep — guys like Mauldin and the superrich (he’s more their advisor than one of them, as best I can tell) are worried that when the music stops they will no longer have a chair. And they’re correct, I think. We simply cannot have a nation in Great Recession I and almost in depression — sure to come if we don’t act — that does not take some drastic steps. Since there is no surplus at the bottom, and consumer-spending our way out of the crisis cannot be done, there remains only the top to pay for getting us out. Given that they got us into this mess, why not require them to bail us out? Yes, I know, the American consumer went a little crazy. Perhaps really nutty crazy. But who aided and abetted them? And who gained from consumer madness? We all know who, including our politicians in bed with these irresponsible and greedy Masters of the Universe. Bring ’em down, before we all go down.

— Butler Crittenden, San Francisco, CA

My man, Butler Crittenden is at it again. See my earlier post, Response to Krugman.

The “Bob” who Butler is replying to is Bob Herbert who has a great Op-Ed, Our Crumbling Foundation, in the NYT today.

Butler agrees with Bob that it would be great to have a national infrastructure development bank to turn this economy around, but asks how are we going to pay for it? So why not increase taxes on the super rich who got us into this mess, and who are way under taxed compared with those in most industrialized countries?

And I agree with him! In fact I think it’s time for a mass revolt in this country!

Here’s another sobering response to Bob’s article:

How many times have we heard these concerns voiced before? Add them to the lengthy list of things we know we need to do in the U.S. that go unaddressed while we save the skins of corporate bankers with trillions in taxes on current and future generations. It is interesting how what now look like insiginificant tens of billions were unthinkable sums to spend on education, health, transportation and infrastructure, while all it took was one weekend’s thought to cough up hundreds of billions, trillions, when it came time to save the banks.

One of the lessons the right wing took from the rebellions of the 1960s is that a populace that is well paid, educated and free is a danger to their wealth and position. They will bring the whole house down on our collective heads rather than risk masses of Americans who are free from fear and ready to ask that the resources that they produce be put to good use rather than merely fill the coffers of the wealthy.

— Vincent Amato, New York City

Right on, Vincent!

But in reality what will we do? Sit back and do nothing.

Boy am I pissed. Is anybody else?

Let’s rise up, masses, and fire calls and letters at our senators and reps, form community groups of like minded people, send barrages of letters to our newspapers (newspapers?), hit the incredibly stupid right wing talk shows. Blast Limbaugh, Cheney, and all the other idiots on the right. Blast the mainstream media as well. As we know, they just go along with their corporate sponsors!

Boy, am I pissed. Is anybody else?

OK, I’ll let CJGC have the last word:

The question is whether good sense and an acknowledgment of our obligation to address our social and physical structural problems to prevent even more dire problems in the future is going to prevail over the small-minded bean counters who can’t see beyond the ends of their noses and those politicians who want nothing more than for Obama to fail.

It’s touch and go. A perfect example is serious reform of health care financing by offering a single payer option. It’s the only way to cover everyone and bring costs under control. So far only the health care industry and the health insurance industry have been invited to participate and Senator Baucus assures us that single payer will never pass.

“Yes we can and change we can believe in” have morphed into “No we can’t. The comfortable hold the reins of power so the rest of you just sit down and shut up.” Of course the comfortable are also going to fall into the holes they think they are just digging under our feet.
Are there special bridges for the defenders of the status quo so they won’t fall in the river too?

Yes, it should be a no-brainer. Sadly, many sitting in comfortable chairs don’t themselves have enough brains to notice. Too smug.

— CJGC, Cambridge, MA

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Many argue that it was really World War II that got us out of the great depression of the 1930’s. Our vast increase in military spending is what reduced the 16.9% unemployment of 1936 to the 4.7% unemployment of 1942, they say.

So, Obama’s plan may not be up to snuff, may not be the fiscal equivalent of war. Paul Krugman is saying it’s only about one-third of what is needed. John Judis suggests an additional $70 billion in high-speed rail plus a new international monetary system.

Are these guys right? Or are our problems to be solved by tax breaks for the rich, Republican style? Me? I’ll take the former.

UPDATE: Obama in his press conference today said that if Paul Krugman is right, they’ll use his ideas, or at least evaluate them seriously. “No pride of authorship.”, said Obama.

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Paul Krugman is back with a great op-ed in Monday morning’s NYT. Here’s the point of his piece, taken from the second paragraph:

But there’s a problem: conservative politicians, clinging to an out-of-date ideology — and, perhaps, betting (wrongly) that their constituents are relatively well positioned to ride out the storm — are standing in the way of action.

There are already a goodly number of comments on Paul’s piece. Here’s one comment that sums up the situation perfectly in my estimation:

As a historian, I am utterly shocked by the response to this economic crisis by Conservative Republicans in Washington and Chancellor Merkel’s response in Germany. What planet are these people on? Have they ever opened up a history book? I hate to say it but it almost seems as if these people have absolutely lost their minds. Here in the U.S., I do feel that these Republicans are simply trying to score political points with their out-of-date ideology by killing another powerful labor union. Meanwhile, the middle class continues to shrink at an alarming rate. Companies like the Big 3 and other major manufacturers provide this country with thousands and thousands of middle-class decent paying jobs. However, all I hear from Republicans at my university and everywhere else is that any intervention is “socialism” or “communism” or part of some internationalist conspiracy for one world government. The Red Scare is over people and McCarthy has long been dead. Why do we keep bringing back these McCarthyist rants during these times of crisis? The truth is these economic conservatives have absolutely no clue what it is like working in a factory and being on the bottom of the ladder, struggling to make ends meet every month. All they want to do is criticize workers for wanting to make a decent wage that actually keeps up with inflation. What is wrong with that? Of course, these Conservative Republicans would have no problem voting for a raise for themselves. But at the second a poor man comes to them for help or wanting health care, they stick their noses in the air. Mr. Krugman, I hate to say this but if something is not done soon with this economic situation, this country is going to fall apart beyond description. What will it take for these people to understand the situation? Do people literally have to be starving to death in the streets, fighting for food, jumping out of windows, killing themselves in their forclosed homes before they notice the problem? I mean come on: it came out the other day that we have been in a recession since December of 2007….it took them this long to notice and fess up? We need to start acting with depression economics now before it is too late. It is time for a Kenyesian revolution now more than ever. The solution is staring in the face of not just the United States but the entire international community as a whole. Why will they not accept that their completely free-market ideology has failed them?

— Matt, Ball State University

Right! Their completely free-market ideology has failed them! And us! Let’s take some action. But we’re still in that state of limbo until Bush finally goes. :roll:

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I’ve been scanning through the comments on the New York Times to Washington Takes Risks With Its Auto Bailout Plans. Most of them are screaming mad at the “bailout” plan for the auto industry. Incidentally, it’s not a bailout; it’s a loan. Anyway, at last I found a comment (#232) I can agree with:

Now we’ve got the mobs all fired up, screaming for the heads of the big 3 CEOs. Meanwhile, the bankers are skulking off with the entire US treasury in their back pockets, and not a hint of oversight. They’re raising interest rates on credit cards. Making it almost impossible to get a mortgage, or to buy a car. Who’s going to buy a car anyway when you’ve lost your job? Toyota’s and Honda’s sales are down 30-40% too. They’re not encumbered with huge contracts like GM and the other domestic producers are, because their governments provide healthcare for their employees and invest heavily in their auto companies. The big 3 were doing just fine a year or two ago, when Americans were buying their gas-guzzlers by the millions because that is what we wanted! It takes time to re-tool factories and make something different. Sure, fine, they should have started earlier. They’ve made their share of mistakes, but the banks, the financial markets, the oil companies and THE GOVERNMENT have been complicit in creating this mess. Free trade is not fair trade. GM is still very successful in Europe, selling fuel-efficient, well built cars. But they’re not allowed to sell cars in Japan. (By the way, the Brits are on the verge of having to bail out their auto industry too – people can’t buy cars when there’s no credit available or they’re unemployed.) So we have a situation where our own manufacturers cannot compete in our own market. And what do we come up with for a solution? Let’s get the government to regulate them even more tightly and make it even harder to compete here! Great! Let’s give the bankers the next installment of their bailout, with no strings attached so they can continue to withhold credit and charge usurious interest rates on whatever they do issue. At least we’ll have the heads of those evil, arrogant CEO’s! That should satisfy the mobs!

— Jim Doyle, Honolulu

Way to go, Jim! And I might add, who cares about the 3.5 million people who will become unemployed if our auto industry fails? As Jim says, we’ve got the heads of those evil, arrogant CEO’s.

Frankly, my dears, I’m sick and tired of people pissing all over our auto industry. And what’s more, the unionized workers are not overpaid. See Missy’s post on this.

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I’ve been following Robert Reich’s blog in recent days. He’s the incredibly short but friendly and articulate guy who once was Bill Clinton’s Secretary of Labor. You can see him every so often as a political commentator on various TV pundit shows.

Bob’s post for today, Friday, December 5, 2008, is captioned Shall We Call it a Depression Now? Here’s the final paragraph from that post:

Two things are needed: First, the massive Treasury bailout of the financial industry must be redirected toward Main Street — loans to small businesses, distressed homeowners, and individuals who are still good credit risks. Second, a stimulus package must be enacted right away. It needs to be more than $600 billion — which is 4 percent of the national product. It should be focused on job creation in the United States — infrastructure projects as well as services. Construction jobs are critical but so are elder care, hospital, child care, welfare, and countless other services that are getting clobbered. Service businesses accounted for two-thirds of the job cuts in November, meaning that the weakness in labor markets has shifted from the goods-producing sector of the economy to the far larger services sector.

I’d say he is right on with that. Reich is right! Not politically to the right, but simply right. The over half a million jobs lost in November should be enough to wake up even the most far right wing nut in the U.S. Congress.

But will it? There are still obstructionists in the Republican party. They’d rather have the whole country go down the tubes in order to embarrass Obama and have a chance for some votes come next elections.

Barney Frank is right too. Do we want an unmitigated disaster on our hands by not bailing out the auto companies? No. We’re forced to bail them out at this point, or the country really really goes over a cliff.

Hey, just my opinion. Of course I could be wrong. Any other opinions or alternatives out there?

UPDATE: Here’s an interesting little blogginheads debate between two guys, Mickey Kaus and Robert Wright. One is for the bailout of the big three autos, Kaus, while Wright is against it.

FURTHER UPDATE: Missy has a great post on The Myth of the Overpaid Union Auto Worker. Great cartoon and great comparison of the auto companies treatment with that of the banks. Check it out!

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Juan Cole always sets me up with cheery news when I read him first thing in the morning. This time it’s about a United Nations Environment Programme study of brown clouds in the atmosphere. These light diminishing clouds stretch from Shanghai to Dubai with various “hot spots” in between. Take a look at the report. It’s pretty impressive. Lots of color maps and data!

So what are the conclusions? Here’s the summary of the findings:
The build-up of greenhouse gases (GHGs) and the resulting global warming pose major environmental threats to Asia’s water and food security. Carbon dioxide (CO2), methane, nitrous oxide, halocarbons and ozone in the lower atmosphere (below about 15 km) are the major gases that are contributing to the increase in the greenhouse effect.

In a similar fashion, increasing amount of soot, sulphates and other aerosol components in atmospheric brown clouds (ABCs) are causing major threats to the water and food security of Asia and have resulted in surface dimming, atmospheric solar heating and soot deposition in the Hindu Kush-Himalayan-Tibetan (HKHT) glaciers and snow packs. These have given rise to major areas of concern, some of the most critical being observed decreases in the Indian summer monsoon rainfall, a north-south shift in rainfall patterns in eastern China, the accelerated retreat of the HKHT glaciers and decrease in snow packs, and the increase in surface ozone. All these have led to negative effects on water resources and crop yields. The emergence of the ABC problem is expected to further aggravate the recent dramatic escalation of food prices and the consequent challenge for survival among the world’s most vulnerable populations. Lastly, the human fatalities from indoor and outdoor exposures to ABC-relevant pollutants have also become a source of grave concern.
So, the ABCs of the ABC problem are extremely serious according to this report. I’m not knowledgeable enough, naturally, to critique it, but even if it’s half true it’s very worrisome. Thanks, Juan. More morning food for thought.

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Can it be that the world as we know it may be coming to an end? Naw, it can’t be that bad, can it? Well, I’ve been cramming as much of this global financial predicament as I can stand into my head the last couple days, between going about my daily chores and ablutions. And, as one might say, this is serious shit. Paul Krugman’s blogs have been my main starting points, but also I watched online Bill Moyers’ interview of George Soros, the man who predicted this perilous predicament a number of months ago. George states that we have wasted valuable time and are still behind the curve but may be lucky. Nothing less than a coordinated intervention by all the countries into their banking systems to supply vast sums of equity, plus huge economic stimulus packages and bailouts for homeowners, will work. Or at least it seems so. Tomorrow, Sunday, Oct. 12, 2008, may be the D-Day, D for decision. Will it work? We’ll have to see.
Update Oct. 12: Well, here it is Oct. 12, Sunday, and it looks like the Europeans at least are starting to get their acts together. We’ll see about the U.S.of A. Paul Krugman still has doubts about our commitments, but thankfully our markets are closed tomorrow, the day Columbus discovered America, or so the story goes…… Oh, and here’s another great source of info on the current situation.

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