I love the original song, and I usually like a good parody, but the subject matter for this one is a little hard to take. Which led me to a few other videos like these:

Congressman Brad Sherman of California’s 27th congressional district told the House in a speech on Thursday evening that several fellow Congressional Representatives have stated they were threatened with the prospect of ‘Martial Law’ should they vote in opposition to the $700 billion bailout.

Congressman Sherman’s revelation comes after multiple claims that this threat was being ramped up to aid the now $850 billion bail out through the House this past Friday.

Earlier this week, Congressman Michael C. Burgess from the 26th District of Texas, went public on Monday stating live on Infowars nationwide radio broadcast, that House speaker Nancy Pelosi had declared House Rule 136A, effectively putting the House under “Martial Law” rules, a dictatorial measure only activated during times of national emergency.

Here’s a video of  Burgess on the House floor:

Analysts and Congressmen alike have equated these threats to “fearmongering” and described them as a form of “economic terrorism” carried out by powerful banking interests in order to secure the record $850 billion payout to the banks by the American people.

According to numerous Congressional testimonies, the stark panic atmosphere which has gripped both Congress and the US media was intentionally created in order to ’fast-track’ a financial bailout bill. Several members of Congress were told before Monday’s vote that martial law might be instigated in America if the legislation failed.

Dennis Kucinich on the Democrats’ Bailout Betrayal
Posted on Oct 5, 2008 - TruthDig.com
By Chris Hedges

The passing of the $850-billion bailout pulled the plug on the New Deal. The Great Society is now gasping for air, mortally wounded, coughing up blood. It will not recover. It was murdered by the Democratic Party.

We are on our own. And don’t expect any help from Barack Obama and Joe Biden, who lobbied hard for the bill and voted for it. Ignore their rhetoric. Look coldly at the ballots they cast against us. We, as citizens, have only a handful of representatives left in Washington, most of whom were left sputtering in rage and frustration on the House floor. The sad irony is that some of them were Republican.

This was the largest single act of class warfare in the modern history of this country, Rep. Dennis Kucinich, D-Ohio, who led the fight in the House against the bailout, told me by phone from Cleveland. It is a direct attack on the American people’s ability to be able to stabilize their homes and their neighborhoods. This single vote will define the careers of everyone. We are back to taxation without representation, to markets that are openly rigged.

“We buried the New Deal,” he said of the vote. “Instead of Democrats going back to classic New Deal economics where we prime the pump of the economy and start money circulating among the population through saving homes, creating jobs and building a new infrastructure, our leaders chose to accelerate the wealth of the nation upwards. They did so in a way that was destructive of free-market principles. They ripped away all the familiar moorings. We are in an uncharted sea where the traditional roles of the political parties are being switched. The Democrats have unfortunately become so enamored and beholden to Wall Street that we are not functioning to defend the economic interest of the broad base of the American people. It was up to the Republicans to protect not just a so-called free market but the American taxpayer and attempt to block this. This is an outrage. This was democracy’s Black Friday.”

Truncated, for the complete article, see: www.truthdig.com/reportitem20081006_dennis_kucinich_on_the_democrats_bailout_betrayal/

Washington, October 3 (RHC)– Throughout the United States, homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments — or Tent Cities — in recent years. According to a report by the National Coalition for the Homeless, nearly 61 percent of local and state homeless coalitions say they’ve experienced a rise in homelessness since the foreclosure crisis began in 2007.

The coalition says the problem has worsened since the report’s release in April, with foreclosures mounting, gas and food prices rising and the job market tightening. Michael Stoops, acting executive director of the National Coalition for the Homeless, said that it is clear that poverty and homelessness have increased, adding that “the economy is in chaos, we’re in an unofficial recession and Americans are worried, from the homeless to the
middle class, about their future.”

According to media sources, the phenomenon of encampments has caught assistance groups somewhat by surprise, largely because of how quickly they have sprung up.

Paul Boden, executive director of the Western Regional Advocacy Project — an umbrella group for homeless advocacy organizations in Los Angeles, San Francisco and Oakland, California, as well as Portland, Oregon and Seattle, Washington — said that the relatively small city of Santa Barbara in California has designated a parking lot for people who sleep in their cars or trucks.

Boden also said that the city of Fresno, California is trying to manage several proliferating tent cities, including an encampment where people have made shelters out of scrap wood. In Portland and Seattle, homeless advocacy groups have
paired with nonprofits or faith-based groups to manage tent cities as outdoor shelters.

Other cities where tent encampments have either appeared or expanded include Chattanooga, Tennessee, San Diego, California and Columbus, Ohio.

The Department of Housing and Urban Development recently reported a 12 percent drop in homelessness nationally in two years, from about 754,000 in January 2005 to 666,000 in January 2007.

But the 2007 numbers omitted people who previously had been considered homeless — such as those staying with relatives or friends or living in campgrounds or motel rooms for more than a week.

In Seattle, which is experiencing a building boom and an influx of affluent professionals in neighborhoods the working class once owned, homeless encampments have been springing up in remote places to avoid police sweeps. Homeless people and their advocates have recently organized three tent camps at City Hall in Seattle in acts of civil disobedience. The camps are to call attention to the homeless and protest the sweeps.

According to media sources, the phenomenon of encampments has caught assistance groups somewhat by surprise, largely because of how quickly they have sprung up.

The economy of the corporate capitalists is like a bicyclist who has ridden over a cliff.

Unaware that they are in free-fall, they pedal madly and are thrilled with their speed.

In 1971, 90% of international financial transactions were related to the real economy (trade or long-term investment) and 10% were speculative. By 1990 these percentages were reversed, and by 1995 about 95% of the vastly greater sums were based upon nothing more than pure speculation.

Money now moves around the world at a speed that defies and baffles government regulators. Policies to “liberalize” investment, combined with advancements in information technology now allow about $1.5 trillion a day to travel across borders as foreign- exchange transactions. Only one to two percent of these transactions are related to trade or foreign direct investment. The remainder is for speculation or short-term investments that are subject to rapid flight when investors’ perceptions change.

After Mexico suffered a rapid exodus of capital in late 1994, the International Monetary Fund and other global agencies claimed that they had set in place new safeguards to prevent a repeat.

Yet, over these same years, the IMF and the U.S. Treasury Department were pressuring nations to remove remaining restrictions on inflows and outflows of finance and investment.

The rapid flight of short-term capital from Thailand, Malaysia, Indonesia, and South Korea in late 1997, and from Russia and Brazil in 1998, revealed that dozens of other countries are Mexico-style crises waiting to happen as nervous investors
move their money elsewhere at the touch of a computer key.

The focus at this point is on using money to make money by expanding bank lending, creating real-estate bubbles, and speculating on fluctuations in prices of currencies and other financial instruments. The financial excesses we are now witnessing on a global scale are much like those that preceded the Great Depression of the 1930’s.

The mechanisms employed by finance capitalism to make money from money, without the intervening necessity of engaging in productive activity, allow those with money to increase their claims against society’s stock of real wealth without contributing to its production.

Meanwhile, by 1999, the wealth of the world’s 475 billionaires was greater than the combined income of the poorest half of humanity.

In the U.S., Microsoft chairman Bill Gates’ net worth is equal to that of the poorest 120 million Americans combined. The average CEO of a U.S. based multinational corporation now pays himself some 425 times the amount of his company’s entry-level employees.

These same capitalists also own the major media, which are constantly bragging about about how great the economy is doing. Actually, in terms of real purchasing power, the income of the average American worker is 13 percent les than it was in 1972.

The average American household now holds some $6000 in credit-card debt alone. Millions of Americans are fighting to keep up while finding themselves in an ever-downward financial spiral.

There are really two separate economies in place. There is that of the corporate elite and that of the rest of humanity. The top one percent of the American population now have more wealth than the entire bottom 95% combined, and this gap is continuing to grow.

The corporate elite, their “Public Relations” spin-doctors and purchased politicians would have us believe that “A rising tide lifts all boats.” In fact, it lifts only the yachts. A tidal wave is on the way.

Jan D. Tuckley
Ridgeley, WV
July 14, 2000

Eight years ago, and Jan nailed it perfectly. The housing bubble bursting and the economy racing towards a second Great Depression are indeed what corporate greed has brought us. People like Jan have been trying to warn us all for years and thanks to mass media and their corporate masters the general public never heard them. Thanks.

“I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”

— Thomas Jefferson
1812

“The world is governed by very different personages from what is imagined by those who are not behind the scenes.”

— Benjamin Disraeli
Prime Minister of England
1844

Eat the Rich

People think that a banking or stock market collapse must be bad for everybody, but it’s not. If you know a stock collapse is coming (because you are going to cause it) then you sell at the highest price, crash the market, and buy back at a few cents on the dollar. In this way, those who cause the crash can end up with vastly more stock, and thus financial power, than they had before the “crisis” and they pay comparatively little to secure it.

The Rothschilds have famously, and infamously, used this technique endless times and they are doing so again today. In the US most recently with their partner JP Morgan in 1929, and again with Rockefeller and JP Morgan Chase in the, decidedly infamous, 911 market crash.

The thing to remember about banks, as with the business and financial world in general, is that there may be many names above the doors, but there are far fewer ultimate owners and controllers. If you go high enough, at least most of them are named “Rothschild. ”

So when public and media commentators talk about a terrible time for the banking industry they miss the point.

Of course, it is bad for those who lose their savings, homes, jobs … lives … But that, to those without access to empathy like the Rothschild Monarchy, is unworthy of thought, let alone dialog or feeling.

After all, they cope with the deaths of thousands in their industrial empires each day.

Basically their business is to ’steer’ the rudder of global corporate warfare and calamity daily. Every day the banker monarches must say yay or nay to uncounted ‘prospectus sellers’ who propose the ‘collapses of towers’ to offset a public opposition to a ‘mineral-acquisition’ war in Africa, or a ‘native-land-acquisition’ war in Latin America, or an ‘oil- acquisition’ war in the Middle East. The body-count statistics shift with the attendant media-spin and public awareness or motivation.

The Banker Monarchies, and their associated network of subordinate families, own the system – the game - and however that system may re-adjust and re-structure itself from time to time the game is still theirs. For example, Merrill Lynch may have failed, but it has been absorbed by the Bank of America, a Rothschild bank if you follow the trail of hidden ownership, and so the game just goes on under different, and fewer, names.

Lehman Brothers may have collapsed, but the vultures, like Barclays in Britain, are circling the corpse to seize the most profitable assets and the game goes on. If you own the game, are part of the security state, you always win because you make the laws under which it is played. The laws which do not apply to the security state members themselves.

The paradigm shift today, due to Global Consciousness, is this bringing of the dialog to the public. To honor life and mind, and take the whole world population under the protection of the voluntary ’security’ state, to finally share the knowledge, the truth of all cultures … for all to share in the decision making. And each to be the locus of the decision making for our own cultural, regional, local, family and personal lives.

The end of global, financial, serfdom, slavery.

People are sacred divine beings, not victim guinea pigs to be modified with the poisons of the oil-chemo war machine, sliced and diced as the ’seven-billion-spare’ body parts for the pharmo-medical monster mouth — you and I are the source and soul of song, of consciousness, of the ‘media medium’, all the arts and humanities, of all herstory.

This experience, of the ‘now’, today, is known as refinement, enlightenment.

Knowing, honoring, the WHOLE rainbow of world culture.

Our GLOBAL ENLIGHTENMENT is Love, aka Respect ….

October 1, 2008

Quickly organized protests around the U.S. drew opponents of the bailout for Wall Street (Joe Newman)

AS THE smoke cleared after Monday’s stunning House of Representatives vote against a $700 billion financial bailout for Wall Street, the politicians immediately got down to the business of blaming each other–and scheming about the next attempt to push through this rescue of the super-rich.

But for working people trying to figure out what the hell has happened to the U.S. financial system–and why the leaders of the U.S. government, apparently regardless of political party, are prepared to spend more than $2,000 for every man, woman and child in this country to save Wall Street–the reaction was different.

For one thing, there was sweet satisfaction to be taken in the fact that the bankers and stockbrokers didn’t get their way for once–especially since they’re out to steal $700 billion in taxpayers’ money to cover their bad investments, under a program devised by former Wall Street CEO and now Treasury Secretary Henry Paulson.

With the business world ratcheting up political pressure and Paulson predicting certain doom if no action was taken, the Bush administration and the leadership of both parties in both the House and Senate were all sure that the bailout bill would go through. Yet the legislation was derailed because members of Congress are feeling the heat from a growing popular outrage over the staggering scale of a giveaway to the very same people who led the economy to the edge of the abyss.

It was an all-too-rare turn of events for the U.S. political system–the opinions of ordinary Americans actually mattered in what happened.

At the same time, though, there’s a sense of foreboding. If the government can’t agree on a bailout, will Wall Street really crash and burn–and cause an economic catastrophe on Main Street, too?

After all, that’s the claim of “King Henry” Paulson and his nominal boss, George W. Bush. They’re basically extortionists, insisting that if Congress doesn’t agree to a king’s ransom for the banks, the economy gets it–in the form of a worldwide financial meltdown that would wipe out workers’ savings and eliminate millions of jobs overnight.

The stock market plunge that followed the House vote Monday will have reinforced such fears. Few workers have the resources to play the stock market, of course, but their lives are affected by its ups and downs, especially the downs–for example, the loss of retirement savings in 401(k) accounts that many workers rely on, now that defined benefit pension plans are going the way of the dinosaur.

So is it true? Are we all–the multi-millionaire bankers on Wall Street and the tens of millions of workers on every other street–in the same boat after all? Do we really need the Paulson bailout to avert a second Great Depression?

The answer is no.

The argument that a bailout of the banks is good of all us is an ideological smokescreen, to cover the specifics of the Paulson proposal, as sanctioned by the Democrats–which benefits the rich and powerful, at the expense of the rest of us.

There are plenty of ways that government intervention could alleviate the financial crisis and provide urgently needed relief to working people. But that would involve programs, policies and priorities that the bankers despise–and that political leaders in Washington want nothing to do with.

Paulson is right to say that Wall Street is facing its most severe crisis since the Great Depression–a catastrophe entirely of its own making–and that the U.S. government has to respond. But the form that response takes–a huge handout for the super-rich or a progressive plan to rein in the banks and help ordinary people–depends on whether workers organize to make their voices heard and felt in Washington.

- - - - - - - - - - - - - - - -

DEMOCRATS LIKE House Speaker Nancy Pelosi and Rep. Barney Frank say they drove a hard bargain and forced concessions from the Bush administration on the Wall Street rescue.

But the provisions they point to–a toothless section that urges banks, “where appropriate,” to negotiate with homeowners faced with foreclosure, as well as easily avoided restrictions on executive pay at rescued companies–are window-dressing at best.

The heart of the plan proposed by Paulson remains in place–a naked power grab of the bankers, by the bankers and for the bankers. This is the scheme that allows Paulson and future treasury secretaries to buy the worthless securities and “troubled assets” of banks and other financial institutions–and not at their current value, if they’re worth anything at all, but at or near the original inflated price the banks paid for them.

In other words, Paulson wants unrestricted power to cover the losses of the world’s most reckless gamblers. All the scare tactics in the world can’t disguise that.

Normally, under the U.S. political system, lawmakers are insulated from any accountability to the people who vote for them. That enables them to pursue an agenda against the interests of the majority. But they do have to face voters from time to time–and, unfortunately for the 435 members of the House, the bailout package came up for a vote just five weeks before Election Day.

As a result, no one in Congress wants to be too closely associated with Paulson’s plan, no matter how badly their patrons on Wall Street want it. Thus, leading Democrats, while going along with Paulson, claimed they did so to “save” the economy, while blaming Bush and the Republicans for creating this catastrophe.

As for the House Republicans, whose defection led to the legislation’s defeat on Monday, there’s plenty of hot air about standing up for the interests of ordinary people. Yet the telling fact was that among those facing a close reelection battle in November, virtually all voted against the bailout.

The Paulson plan will be back before both houses of Congress before the week is out, perhaps with some token changes to pick up a few more votes. But the essence will be unchanged: It is a proposal for the greatest transfer of wealth from workers to the rich in U.S. history.

- - - - - - - - - - - - - - - -

WHAT’S REALLY required is an entirely different kind of government intervention in the economy.

For starters, the banking system should be nationalized. This could provide immediate relief for the international credit squeeze, in which banks are choking off economic growth by refusing to lend to one another.

The next order of business: ban the Wall Street casino for high-stakes gambling on incomprehensible investments like “collateralized debt obligations” and “credit default swaps.” The banks’ ability to damage our livelihoods with their speculation should be ended immediately.

Nationalized banks are nothing new. For much of the second half of the 20th century, they were the norm in Western Europe–and they remained capitalist institutions to boot. But a nationalized banking system would at least provide more public accountability over the operations of these institutions and subject them to greater political pressure.

What’s more, it’s hard to describe the federal government’s recent adventures in the banking industry as something other than nationalization. In the past week, the FDIC seized control of Washington Mutual (the largest savings and loan in the country) and sold it to Bank of America at a bargain-basement price, and then put Wachovia (the fourth-largest bank) out of its misery with a forced sale to Citigroup.

But to sweeten the latter deal, the FDIC had to agree to cover any losses in excess of $42 billion out of the $312 billion of bad debt on Wachovia’s books. Yet Citigroup gets to keep the profits from having a bigger share of the market. Why shouldn’t taxpayers get the gains from this merger, instead of just the losses?

After three decades of free-market dogma pushed by both Republicans and Democrats, nationalization of the banks might seem unthinkably radical for the U.S. But it was the Wall Street conservative Republican Paulson who presided over the nationalization of mortgage lenders Fannie Mae and Freddy Mac, and the insurance giant AIG.

Paulson’s $700 billion bailout plan is also a form of nationalization–but one that socializes the banks’ losses at taxpayers’ expense, while leaving the profits in private hands. Why not take control of the banks outright, and send their corrupt and incompetent executives packing?

An economic bailout on pro-worker terms would include much more than nationalizing the banks.

There would be a moratorium on home foreclosures, mandatory renegotiations of adjustable-rate mortgages, and incentives to convert empty, newly constructed condominiums into affordable rental housing. Also badly needed is a plan to create jobs, starting with a public works infrastructure program that could rebuild schools and housing in run-down inner cities. The expansion of public transportation and government investment in alternative energy would also be priorities.

Such a program is a long way from what’s being discussed in Washington. For their part, Democrats from Barack Obama on down are content to attack the Republicans as the source of the economic catastrophe. That may be enough to get them elected, but the policies they promote don’t even begin to address the scale of the problem.

This economic crisis is still in its early stages, but it’s already clear that the old ideology of the free market is out. However, nothing has appeared to replace it–and so the mainstream political and economic discussions are a muddle of old ideas and half-baked schemes.

We need to start the debate on the real alternatives now–to raise the ideas, the strategies and the organization that working people need to resist the attempt to make them pay for the crisis.

While this thought is still fresh in our brain...
let ' s take a look at New Orleans ...
It ' s amazing what you can learn with some simple division.

Louisiana Senator, Mary Landrieu (D)is presently asking Congress for
250 BILLION DOLLARS to rebuild New Orleans .  Interesting number...
what does it mean?

A.
Well... if you are one of the 484,674 residents of  New Orleans
(every man, woman, and child)you each get $516,528.

B.
Or... if you have one of the 188,251 homes in New Orleans , your
home gets   $1,329,787.

C.
Or... if you are a family of four...your family gets  $2,066,012.

Washington, D. C
< HELLO! >
Are all your calculators broken??

Accounts Receivable Tax
Building Permit Tax
CDL License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax < BR>Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Service charge taxes
Social Security Tax
Road Usage Tax (Truckers)
Sales Taxes
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Tax
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax

STILL THINK THIS IS FUNNY?

Not one of these taxes existed 100 years ago...
and our nation was the most prosperous in the world.

We had absolutely no national debt...
We had the largest middle class in the world...
and Mom stayed home to raise the kids .

What happened?
Can you spell politicians?

I can see the tongue-in-cheek humor, but really, was this the wisest thing to do in today’s political climate? Probably not. It seems to have caused a fair bit of uproar on the net.

From The Colorado Independent:

By Ernest Luning 9/25/08 5:08 PM

Protest groups are demanding Denver police halt the sale and discipline anyone responsible for the creation of a “commemorative” DNC T-shirt distributed to officers featuring a baseball-bat wielding cop and the slogan “WE GET UP EARLY to BEAT the Crowds 2008 DNC.”

The black T-shirt — which also displays a 68 with a slash through it, a reference to demonstrators’ intentions to bring the spirit of the 1968 Democratic National Convention to Denver — has been available for sale since the week after the convention at the office of the Denver Police Protective Association, a union representing most of Denver’s 1,400 police officers, according to DPPA employees.

What does this say about our police officers?

They have a dark sense of humor?

Brian Maass,CBS4 NEWS, over at Rocky Mountain News says this about it:

A tongue-in-cheek T-shirt poking fun at Democratic National Convention protesters is selling fast and creating some minor controversy along the way.

The shirts were created and distributed by the Denver Police Protective Association, the union that represents most of Denver’s 1,400 police officers.

…

The Denver police detective who produced the shirts, Nick Rogers, says he has received no complaints until now. He said the shirts are being sold for $10 each at the Police Protective Association offices.

He said every Denver police officer was given one.

There’s more to the story though, as I found out over from Michael Roberts at The Latest Word:

This graphic can’t help but recall flyers that juxtaposed a riot-gear-clad policeman and the slogan “WE BEAT YOU THEN! WE’LL BEAT YOU AGAIN,” which appeared prior to the DNC. Those, too, referenced Re-create 68, and the group’s reps suspected the Denver Police of being behind them — at least until Westword reported that an artist who later revealed himself to be Pete Bergman had created them as a combination art project and media prank.

Predictably, the Re-create 68 forces don’t find this coincidence to be amusing.

…

Here’s the flyer:

I can see how someone might see that as offensive.

However, I can see how the police might be offended by the whole re-create 68 movement. Considering the violence of the 1968 convention.

I don’t believe provoking unneccessary violence is ever a good idea.

As of spring 2008, we’re probably just a third of the way through the unfolding debacle in the housing, credit, and financial markets. In political and regulatory terms, the ultimate problems and remedies have only begun to define themselves.

We’re not just looking at an ordinary recession. Since the 1970s, the United States has redefined itself from a manufacturing nation to a financial economy built on debt, leverage, and a considerable ratio of speculation. Both political parties have been complicit in this, and the downturn now beginning will be unusual and potentially tragic.

The case being made in some reform-minded and progressive circles — that we are on the cusp of a grand political, ideological, and pro-regulatory opening such as that of 1933 — has some logic but also merits a considerable amount of economic and historical caution. The plausible analogies deserve a quick run-through. To begin with, there is the prospect that, over the next few years, the largest credit bubble since the Roaring Twenties is going to unwind with at least some of the angst and pain of the Depression years.

In 2007, total credit-market debt in the U.S. reached almost 340 percent of gross domestic product, far above the previous high-water mark of 287 percent a few years after 1929. Second, it is also becoming likely that the 2006?2010 decline in U.S. home prices will be the largest in three-quarters of a century.

However, there are also good economic reasons why the analogy should not be overindulged; today’s U.S. political economy is quite different from that of 70 years ago in several ways. First, whereas the 1929 crash came in the wake of three to four years of strongly deflationary trends in the global commodity markets, today’s international economy is caught up in what appear to be major inflationary pressures in global agricultural and energy prices. In its panic over deflation, today’s Federal Reserve may be more likely to err in the direction of feeding inflation.
The second relevant caution is that finance is a far more dominant element in the current-day U.S. economy than anyone could have imagined in the era of Herbert Hoover. Even amid 1929 ballyhoo and tickertape, finance was overshadowed by manufacturing. In the 1990s, by contrast, financial services sprinted ahead of manufacturing as a share of U.S. GDP. By 2006, financial services counted for over 20 percent of the economy, and manufacturing just 12 percent. As of 2008, portions of this swollen sector — mortgage finance, reckless securitization products like Collateralized Debt Obligations (CDOs), and elements of the credit markets — now threaten to implode. Still, even if the de-leveraging of the U.S. economy over the next few years is as painful as it was during the 1930s, that does not necessarily re-recommend the New Deal regulatory model. It will probably recommend some model that the 2008 political debate has not even touched upon.
The third relevant caveat is that the United States is now far more exposed to negative international actions and perceptions than it was in the 1920s and 1930s. Back then, the United States enjoyed three beneficial attributes: It was the world’s leading energy producer, the world’s leading manufacturer, and the world’s leading creditor nation. So favored, the U.S. economy was able to survive the years of Herbert Hoover’s inactive stewardship. Over the last decade, however, under the derelict management of George W. Bush, the United States has cemented its embarrassing status as the world’s leading debtor nation, the No. 1 importer of foreign manufactured goods, and the No. 1 importer of foreign oil. As a result, the shrunken dollar has lost over 40 percent of its value against the euro since 2002. That shrinkage could even intensify if foreigners believe that the U.S. government, in particular the Federal Reserve Board, is committed to supplying liquidity to rescue
reckless financial institutions at risk of inflation and at the expense of dollar holders.
The careful reader may now be saying: Ah, so in some ways, the next couple of years could be more trying than 1929?1932. Yes, at least insofar as this time we have a half-century of undisputed global economic hegemony to lose. However, the 1930s analogy may be a political illusion. New Deal-style interventionism, which succeeded in the largely domestic financial context of the 1930s, is probably not suited to the realigning global economic milieu of 2009-2112. Realistically, it will be a year or two before we have a good idea of what might be better suited. Still, the next administration will have to have a proactive international strategy with respect to oil and currency matters, two particular failures of the Bush regime.

My concern is that the U.S. economy truly faces its most serious difficulty since World War II or the Depression, and the established wisdom of Democratic and Republican gurus alike has little handle on the dilemma’s causation or probable time frame. The last two presidential elections where major economic weakness was front and center — 1980 and 1932 — had ingredients and predicaments that dated back several years or more, and both out-parties had their election arguments reasonably at hand. Even so, the consequent economic reform and policy debate stretched out for two to three additional years. As of April 2008, we are further behind this new cycle’s analysis-and-debate curve.
Without trying to frame a specific list of reforms, which I do not have, the new outline of economic- and financial-sector failures is somewhat easier to identify. Between the 1980s and the present, the United States moved in three unfortunate directions: first, the adoption of public and private debt as both an economic nostrum and culture; second, the pursuit of a neo-mercantilist policy (bailouts and other policy biases) that all but anointed finance (rather than high-value-added manufacturing) as the Washington-favored U.S. sector; and third, abetting an economic realignment through which manufacturing fell from some 25 percent of GDP in the 1970s to 12 percent in 2006, while financial services jumped from 12 percent in the 1970s to between 20 percent and 21 percent during the 2003-2006 period.
Was this three-fold change in direction ever debated in the public square or in the halls of Congress? Of course not. Most conservatives and many liberals in Washington were busy chanting a simplistic mantra — government can’t be allowed to pick winners — while the Treasury Department’s and Federal Reserve Board’s favoritism toward and bailouts of finance amounted to essentially that.
Over the last quarter-century, under Republican and Democratic administrations alike, the two major tools of this transformation were debt and the socialization of risk (but not of profit). The second, of course, abetted the first. When reckless expansion of consumer, corporate, or financial debt would go sour, the government served up a bailout to help the financial sector come back, fatter and cockier than ever. To suggest “bubble and bail” as a description of U.S. economic policy over the past quarter-century is inelegant but by no means inaccurate. Obviously, this is not the way to manage a nation passing the peak of its global power and very much at risk from a reckless financial endgame.
Indeed, the historical precedents are chastening. Both of the last two leading world economic powers — the Dutch from the 17th century into the early 18th and the British from the early 19th century to World War I — did more or less the same thing. After they built their global economic clout they shaded away from making and trading things into a prideful emphasis on financial services and debt, and both ultimately took on international and military commitments they couldn’t afford. The lesson is that global economic success breeds hubris and that hauteur breeds over-financialization.
As of spring 2008, these fat golden pheasants have come home to roost. The interaction of reckless finance and failed politics may well be bringing about the great global crisis of American capitalism. Back in the Spring of 2007, preening Wall Street strategists were heard to boast that financial output — principally corporate bonds and structured financial products — could in itself provide a lucrative enough export to offset most of the $800 billion yearly U.S. current account deficit. The latter principally reflected how the United States was obliged to import one-third of the manufactured goods it needed and almost two-thirds of the oil. By early 2008, however, this pretense of an eager world awaiting U.S. financial exports had collapsed alongside the credibility of CDOs and mortgage-backed securities. In 2006, foreign net acquisitions of long-term U.S. stocks and bonds came to $722 billion, but that dropped to $596 billion in 2007, because of plummeting overseas demand after the August credit-market panic. (Asian government funds that seem to be bailing out U.S. banks and investment firms are now insisting on actual ownership percentages, not just the speculative investment products that have put the U.S. financial sector into such disrepute.)
No sane parliament or Congress would ever vote to put the fate of a leading economic power at the top of its global trajectory in the hands of a sector given to manias, bubbles, panics, crashes, incessant speculation, rich-poor polarization, and roller-coaster movements in interest rates and credits. But that may well be what happened over the last quarter-century — creating, however inadvertently, a debt bubble that dwarfs that of the 1920s.

*** What do we do now? What cannot work, alas, is any attempt to jump into a political time machine and reverse the political and economic decision to cast America’s destiny with the ambitions of mega-finance. Better if we could reverse it — better if debt had remained under control instead of making itself into a grand and lucrative industry. Better if housing in the United States had never been hot-wired to global credit markets. Better if financial services had been kept in the range of only 14 percent to 15 percent of GDP, while a vital manufacturing sector more akin to those in Germany, Japan, and Switzerland had been made into the 21st-century U.S. economic centerpiece.
That is no longer an option. And however satisfying the attempt might be, there is no way to whip an abusive financial sector back into shape in the 1933-1936 manner. By 1936, the financial sector was deflated and beaten, a small, shrunken lump on the Depression-era economy. As of early 2008, by contrast, the finance, insurance, and real estate sector, although somewhat trimmed, is still the largest sector in the private economy, and the financial markets remain the command center for much of the rest. Money still owns — or at least rents — U.S. politics. And more specifically, the financial sector — including mortgage finance and the credit-card issuers — is at the center of an unprecedented web of public and private debt that has been spun through and around the so-called real economy. Finance has become the real “real economy.”
This is no vague abstraction. The growth of public and private (consumer, corporate, and financial) debt shown in the table at right is closely related to the rise of what the press has belatedly started to call the debt industry. Indeed, most financial-services conglomerates can list debt and credit instruments (cards, securities, and fees) as their principal products and services. For what is sometimes lumped together as Wall Street, the rise in total U.S. financial and non-financial debt from $2.4 trillion in 1974 to a staggering $44.7 trillion in 2006 was a vocational Comstock Lode.
It has been a commonplace in political Washington that “bad” debt is principally the public kind associated with federal budget deficits, and the rest of it doesn’t matter that much. But however convenient this differentiation may be for members of Congress who receive 40 percent or 50 percent of their campaign funds from the financial-services industry, it is also deceptive. As the table shows, between 1974 and 2006, the biggest growth was not in public or non-financial business debt but in financial and consumer (principally mortgage and credit card) debt. In short, the decisive increase was in the facilitation of the debt and housing bubbles and the ballooning of the financial-services sector. Take particular note of the $10 trillion growth of financial debt between 1994 and 2006. This was a fair part of what skyrocketed financial assets, fueled the hedge funds, leveraged the financial sector into the economic catbird’s seat, and transformed debt into a systemic booby trap.
The Federal Reserve Board’s rapid money supply expansion aided and abetted the expansion of private debt, while the government’s periodic bailouts — of the Mexican peso in 1994 and Long-Term Capital management in 1998 — minimized Wall Street’s casualties. Together, these policies gave dangerous encouragement to the reckless elements of the financial sector. During the 1997-2001 period, this private debt boom nurtured the high-tech bubble along with such malefactors as Enron, WorldCom, and Global Crossing; then, between 2002 and 2006, it fed the malfeasance of mortgage lenders and Wall Street packagers of such exotic instruments as CDOs and deceptive mortgage-backed securities.
Both Democratic and Republican presidents pursued these policies. The Reagan administration and the first Bush administration indulged in deficit-ridden public finance and reckless lending practices in commercial banks and savings and loan institutions alike; the bailouts were notorious. The Clinton administration brought down the federal budget deficit but bailed out Wall Street repeatedly and abetted the private-debt orgy that nurtured the tech bubble. The second Bush administration, together with the Greenspan Fed, encouraged the blowing up of a giant mortgage and housing bubble to replace the stock-market bubble that imploded in 2000-2001. The Republicans may be more to blame over five presidential terms than the Democrats were during just two, but both parties seem to have pursued a common underlying financial mercantilism of bubble and bail.
Perhaps that is why, when the Federal Reserve Board threw any trace of classical free-market economics out the window to rescue Bear Stearns, to cut interest rates by three-quarters of a percent, and to open up its vaults to investment firms wallowing in the consequences of their own strategic misjudgment, the three major presidential hopefuls, Democrats Barack Obama and Hillary Clinton and Republican John McCain, were uncritical and broadly supportive. The socialization of credit risk is now bipartisan public policy. The intimate collaboration of the federal government and the financial sector is now bipartisan public policy. A desperate attempt to patch leaks in the overgrown debt bubble is now bipartisan public policy. If anybody seems inclined to break with the bipartisan past, however, it is Obama.
The United States is not a second Japan, but the extent to which the U.S. government has also been drawn into financial mercantilism, subsidies and assets management not unlike that of the Japanese in the early 1990s, deserves serious attention. Certainly the senior officials of the U.S. Treasury and the Federal Reserve Board are not going to be wearing the Adam Smith ties so naively sported by Reaganite economists in the early 1980s.
The diminished international reputation of both the United States and its battered currency remains a huge problem. The dollar — the principal hostage to foreign perceptions of these massive U.S. shortcomings and dependencies in goods and energy — has paid a steep price and may have further slippage ahead. The oil-producing nations and top manufacturing countries that hold large reserves in their central banks and sovereign wealth funds may be convinced to drop their commitments to the dollar. Some may doubt that the U.S. can straighten out its economic affairs. Others may conclude that pegging their own currencies to a slumping dollar is causing too much inflation, as it is currently in Hong Kong or the Persian Gulf.
Officials in Beijing, Singapore, Riyadh, or Brussels expecting U.S. politicians to confront this nation’s fundamental problems during the 2008 election year will be waiting for Godot. Honesty about the American debt bubble or the failures of Washington or Wall Street will be intermittent, at best. If the Republicans are known as the party that kowtows to corporations, the Democrats are coming on strong with their own ties to finance. Not only do the Democrats lead in 2007-2008 contributions from the financial sector, hedge funds especially, but the political geography of their national coalition is increasingly centered in the cosmopolitan states that include the leading money centers: Boston, New York, Philadelphia, Chicago, San Francisco, and Los Angeles. It is very hard to imagine a Democratic president or Congress reversing field to support stiff reforms of the sort sure to be opposed by financial-sector leaders. McCain presumably would be even less inclined.
Let me give some hypothetical examples of the problems crying out for deep reforms. Just as the 1990s leap of financial services ahead of manufacturing in the U.S. economy resembled the triumph of manufacturing over agriculture in the late 19th century, we see today another example of the initial inability of government regulation to deal with the new economic power axis. This most obvious failure came with respect to what bond billionaire Bill Gross calls the “shadow” financial system — the new non-bank financial enterprises from hedge funds to structured investment vehicles and issuers of asset-backed securities — that has grown up virtually unsupervised outside the existing bank regulatory framework. New legislation is in order, but nothing far-reaching can happen before the November elections.
In 1999, even the older elements of the financial sector — banks, insurance companies, and the like — flexed their new muscle successfully enough to repeal the federal Glass-Steagall Act, which had long separated deposit-taking banks from investment activities. Within a few years of repeal, banks, insurance firms, mortgage lenders, and investment companies had intertwined through mergers and holding companies and launched new innovations and experiments. One conspicuous example involved banks, real estate lenders, and issuers of mortgage-backed securities teaming up to offer slick, new, exotic financing to people who were at best marginally qualified homebuyers in order to be able to resell the mortgages en masse through mortgage-backed securities and CDOs. Anyone who expects the Democrats to take the lead in re-enacting portions of Glass-Steagall in 2009 should remember that the three most conspicuous proponents of repealing Glass-Steagall in 1999 were Democrats — Bill
Clinton, former Treasury Secretary Robert Rubin, and Citigroup Chairman Sanford Weill.
As for the securitization process, regulators in Europe, Britain, and elsewhere appalled by the “opaque” products have called for international regulation that sets out enforceable descriptive criteria and perhaps even requires a necessary degree of standardization. There is a chance that other nations will insist that new standards be met. The Bush administration has shown no interest in this kind of solution, but little has been heard from Capitol Hill, either.
The next president will also need to confront the role of banks: If the important mega-banks are too big or too interconnected with the rest of the financial sector to be allowed to fail, then why are they allowed to indulge in every form of speculation and anti-social behavior, from counseling Enron on tax evasion to gouging on credit-card interest and fees? Martin Wolf, chief commentator of the Financial Times, has contended that “what we have [in banking] is a risk-loving industry guaranteed as a public utility.” If banks are to be rescued because they are too big to fail, they should also become, in the manner of a public utility, too well-behaved and too responsible to fail.
*** Looking ahead, if the Federal Reserve Board fails in its attempt to favor, subsidize, and bail out the broad financial sector — not just commercial banks but brokerage houses — then the Fed itself could jump to the head of the list of institutions in need of regulatory reform. During the 1980s, conservative economist Milton Friedman called banking “a major sector of the economy in which no enterprise ever fails, no one ever goes broke. The banking industry has been a highly protected, sheltered industry. That’s because the banks have been the constituency of the Federal Reserve.”
If Friedman were alive today, he would have to enlarge his critique: The overall financial sector has now become the constituency of the Federal Reserve, which has guided and subsidized its slow but threatening takeover of the U.S. economy. To enlarge the Fed’s role now, as Treasury Secretary Henry Paulson urges, is only to reward complicity and culpability.
Having raised these possibilities, I am not sanguine about change. The lesson of history is that previous leading world economic powers, from Rome and Imperial Spain to the Netherlands (back when New York was New Amsterdam) and early 20th-century Britain, have been unable to reform themselves in time to avoid decline. Politics has failed in the face of entrenched interests. In the process, excessive debt and dependence on finance rather than production has been front and center. New nations move to the head of the line — and these days we can see Asia smiling.

Kevin Phillips is the author, most recently, of Wealth and Democracy: A Political History of the American Rich.

http://www.gp.org/index.php

Please Take the time to see what the Green Party has going on. I was going to withhold my vote this year… something I have never done- but I see that voting Green Party will tell the rest of the nation that we don’t have to put up with these atrocities any longer! So, please- take the time to see what they are doing. After all, how many hours have the Democraps and Repuglicans taken up of your time?????

Also, I will say, once again, what I have said since the Supreme Court committed treason and appointed a president of the United States. The ultimate goal of the Bush Juggernaut is a fascist government and the total collapse of the U.S. Dollar. How far away are we now? Besides, I still won’t believe the bastards have left the White House until the helicopter has flown away from the White House, Bush, Cheney, wives and dogs in tow.

So, what the hell? “And it’s one, two, three- what are we fighting for?” {Country Joe McDonald and the Fish} It has taken a lot to break the bank for this Once Great Nation…. But endless extreme war {in which Bush Co. has profited to the extreme on the hardware of war- an international war crime, might I add), corporate give-aways, tax-dodging for the very wealthy, funding of heinous piracy on Wall Street, and other atrocities as yet unrevealed certainly have changed the tides of financial realities. The aristocrats learned from the French Revolution… don’t let the peasants know who is really in charge.

What will we do? Well, as I was reminded this morning, there is a Chinese blessing/curse for this moment in History… “May you live in interesting times.” Right on! Let’s live it then. And while you are at it, please consider turning off the black magic box in your life… your television! You are being mesmerized by the Beast itself! Stop. Look. Listen… this is, after all, our world and our lives, too. Let us live by our own convictions and means.

Good luck to us all… and may we be able to see the interesting times for what they are!

From Earthmother Carla