U.S Debt Crisis?

U.S Debt Crisis? Easy to solve. Since U.S. Governmant has run out of money to pay it’s debts then “We the People” must use our military to force those who DO have the money to cover them. After all, our prisons, welfare, wars, and international funding programs have created a wealthy class. We need to reform certain social structures first; budget will take care of itself later.

The public has been led to believe through media propaganda that the trillions of dollars of our money spent on military and wars have been necessary to secure the Common Good and the future of America. But, in reality, the Common Good has been enfeebled, raped and plundered. It is 1776 again, and George III has mysteriously won the Revolutionary War. ”Washington” which once was a name which inspired truth, gallantry, heroism and patriotism has morphed into fraud, opportunism, cowardice, and treason. The Common Good, once esteemed as a high ideal and sacred resource of freedom, productivity and progress is enslaved now by our new corporate masters and financial owners. The values of government and the forces of arms have been so exceedingly exploited that the promise of wealth and prosperity of the nation it’s resources and the people has transferred into the hands of a cunning few. The Federal Government is no longer the proud repository and spokesman of this wealth because in effect there is none to speak of.

But yet, there “is” immeasurable riches. For, every dollar owed by the People shows up on the credit side of our lenders and draped over the lithe shoulders of their wives, sons and daughters. It was their needs from the beginning that the People were inculcated to finance. It was their interest from the start that the People were guided to supply. Is it not their intricate designs, voluminous plans and new world order that are leading us headlong to the financial ruin of our nation and indeed the whole world? Why now would those who have ursuped our strength show any concern? Do not those who sell us unnecessary goods mock us in our folly for buying them? Do not those who promised prosperity now laugh at how gullible we have been while they cruise the Greek Islands eating fresh papaya in cool and refreshing splendor? Do not those who dwell comfortably in their immoral riches despise and scorn us in our poverty upon which they capitalize while building for themselves magnificent banks, tall buildings and a vast global empire? But, the feet of such an boastful and tall image is of clay. It will crumble in a single day.

The US President vs. The CEO.

The US President vs. The CEO. A President is an official elected by the media conditioned masses; a CEO is an official elected by the intelligent few. The President represents a government whose taxation is the bane of our existence. A CEO represents an industry whose products are and integral part of our daily lives.

Presidents continually sell out the naive public. CEOs sell us innovations that improve our health, efficiencies and personal comforts as an integral part of the public's daily lives and ratified by earnings derived through customer satisfaction and consumer benefits. The President sends our children to war. The CEO sends our children to training, college, and to others who can guide their careers to excellence through organization and sound collective efforts.

A former CEO of Carrier International once told me that he "was" the company. CEO bonuses are voted on by the boards of trustees based on measurable merits on all levels. They are like the a Carnegie or a Morgan. [I get into my fourteen y...ear old Pathfinder turn the key and go. When I need a part I can have it shipped in 24 hours from anywhere.] The great financial gap between the rich and poor is seen in the difference between what is required to govern a global company, and millions of consumers and those who have trouble governing themselves let alone thousands of employees.

The Crisis Gives the US New Financial Power

By Ricardo Hausmann

Published: December 15 2008 19:19 | Last updated: December 15 2008 19:19

The economic crisis in the US signals the end of American global hegemony. Or does it? Pundits from different camps, some with fear and others with glee, contemplate a future where the US will have a much diminished weight in global affairs. But if the US plays its hand well, things will turn out to be just the opposite.

It is useful to remember that power is a relative, not an absolute concept. True, the US has been hurt by the current turmoil but so have many others. The Dow Jones is down by almost 40 per cent so far this year but this makes it pretty much the best performing stock market in the world.

More importantly, as far as power is concerned, unfriendly states such as Russia, Iran and Venezuela are suffering from a dual collapse in the price of their oil exports and the value of their sovereign bonds.

Remember the dangerous scenario this past summer with Russia intervening in Georgia and threatening Europe with the energy card?

Now, Russian policymakers perform daily prayers just to be able to open the stock market for regular business.

More broadly, the financial meltdown has translated into a sudden stop in capital flows to emerging and developing countries, which threatens to destabilise their growth, their financial systems and their government accounts.

Contrary to popular opinion, the current crisis has very little to do with the Armageddon that Nouriel Roubini, professor of economics at New York University, predicted over the past few years. In his mind, the widening US current account deficit would eventually top the willingness of the rest of the world to fund it, causing the US dollar to crash while long term interest rates on US Treasury bonds would soar.

That has little to do with this crisis: the US has become the only remaining super-borrower, able to issue thousands of billions of dollars in debt at record low rates while the dollar strengthens. People are unwilling to lend to almost anybody except for the US Treasury. This has allowed the US to provide – at record low cost – about $5,000bn (£3,325bn, €3,700bn) to bail out its financial system and organise a Keynesian reflation of its economy.

At the same time, fairly well behaved countries such as Brazil, Colombia, Mexico, Peru, South Africa and Turkey have essentially lost access to external finance.

What should the US do with its newfound financial power? While it is tempting to use this power only for domestic policy purposes, it would be a mistake to do so.

First, the US is already running a large current account deficit, a reflection of the fact that domestic spending is well above output. Using the capacity to borrow just to spend it domestically is going to aggravate this deficit and leave the US with a worsened external balance that will limit growth down the line.

Second, net public debt is rising sharply just as baby boomers will begin to collect their social security cheques, worsening long-run fiscal solvency.

Third, many countries across the world are going to suffer the consequences of the lack of access to finance at a time where the decline in their export earnings would have warranted more borrowing to smooth things out. If unchecked, this will cause their economies to shrink and their imports to decline, hurting US exports just when they are most needed. Under these conditions, there is the risk that countries will shut themselves off from the global economy and impose the financial equivalent of the protectionist Smoot-Hawley Act of 1930 . This can lead to an unravelling of the consensus for globalisation that has characterised the post-cold war era.

Fourth, if the US re-circulates financial resources, by on-lending to well behaved countries that have lost access because of the financial crisis, it would not increase its net debt but instead would make money for the US taxpayer while helping increase demand for US exports.

Fifth, re-exporting capital to the rest of the world would prevent the inconvenient strengthening of the dollar.

Finally, exercising this function would give the US enormous soft power in the world. Countries would have to decide whether they want to play ball with market democracy and benefit from access to the financial resources that the US and others can mobilise, or try to form a separate camp with Russia, Iran or Venezuela just as the rug has been pulled from under them.

Re-circulating the money in the needed scale will require more than business as usual at the International Monetary Fund, the World Bank and regional development banks. These institutions have been lending well below $100bn a year but the collapse of financial markets represents some $700bn in lost access.

Moreover, countries are afraid to ask for assistance for fear of scaring the markets. The US Federal Reserve has already broken new ground by offering $120bn in swap agreements with Brazil, Korea, Mexico and Singapore but this is geographically limited and unilateral. Intervening directly by creating a fund to purchase globally public and private securities, as is being done at home, and the Latin American Financial Regulation Shadow Committee – of which I am a member – has recently recommended, may be a promising way forward.

The author is the director of Harvard’s Center for International Development and a member of the Latin American Financial Regulation Shadow Committee

Dick Cheney Quick Review: "Born second man".

There was an interesting article in the TMP Cafe:

Cheney's Esurience

By Jacob Heilbrunn - November 21, 2008, 6:06PM

"These have been very enlightening blogs. However, the question of how to reconcile executive power with "conservative" values does not seem so far-fetched: In order to create "free" markets, untie people from the networks of liberal social policies, and give free reign to religious values etc, you need a "strong executive." In unguarded moments, "conservatives" like Michael Ledeen will drop their guards and use the word "dictatorial." Cheney himself was quoted with the word "monarchical" at some point here. It's like Pinochet in Chile, who had to "torture people to free markets," as on Uruguayan writer put it, except in the U.S. you still need to keep it secret.

Without claiming to be able to look into Cheney's soul, it also seems obvious that his craving for unrestrained power does not simply represent a wish to fulfill his job as efficiently as possible (in that sense he is no Thomas Beckett). No, if we look at Cheney's record as a Congressman, it becomes clear that he was one of the most ideological members of Congress, an extremist even among hardcore cultural conservatives, beginning with his opposition to Martin Luther King Day. In his book "Dick," John Nichols chronicles Cheney's extremist votes against any form of gun control, reimbursing states for immunization programs for children, opposing a law to allow federal employees to take time off work to care for sick family members, etc (often Cheney was one of only a handful of Congressmen opposing measures as those above).

Looking at Cheney's career as a whole, it is fair to describe him as a politician who was adept at only one thing: avoiding taking real responsibility for the consequences of his actions. He was the born number two guy, somebody who can afford not to compromise, because he would never put his policies to real tests. That's why he HAD to manipulate, scheme, and outsmart his competitors behind the scenes.

I would even go further (indeed further than any of the contributors here): Cheney is a dilettante, at least as a politician. He dropped out of Yale, he never finished graduate school, his client Gerald Ford lost the 1976 election by following Cheney's advice, the Republican party is in shambles following his policies. Yes, he managed to enrich his cronies. He is a talented criminal I suppose. But otherwise?"

Posted by John
November 22, 2008 12:17 PM

The United States Position on the Current Financial Crisis

http://www.whitehouse.gov/infocus/economy/

Fact Sheet: Plan To Stabilize Financial System Is Limited In Size, Scope, And Duration

The Federal Government Is Acting Swiftly To Preserve Our System Of Free Market Capitalism And Return Our Nation To A Path Of Prosperity, Job Creation, And Long-Term Economic Growth

On October 17, 2008, President Bush visited the United States Chamber of Commerce and discussed the actions that the Federal Government has taken in response to the financial crisis. The President explained that the government took swift action to protect the financial security of the American people. One important element, the equity purchase program, is designed with strong protections to ensure the government's involvement is limited in size, limited in scope, and limited in duration:

• The government's involvement is limited in size. The government's investment is capped for any individual firm that chooses to participate in this voluntary program, so that private investors retain control.
• The government's involvement is limited in scope. The government will not exercise control over any private firm. The shares owned by the government will have voting rights that can be used only to protect the taxpayer's investment – not to direct the firm's operations.
• The government's involvement is limited in duration. This program includes provisions to encourage banks to buy back their shares from the government when the markets stabilize and they can raise money from private investors.

We must never lose sight of the enormous benefits delivered by the free enterprise system. Democratic capitalism remains the greatest system ever devised. Around the world, free market policies have lifted millions of people out of poverty and given them the opportunity to build a more hopeful life. In the United States, it has given our large and dynamic economy the flexibility and resilience to absorb shocks, adjust, and bounce back.

... it continues.

The Timeline of the Great Depression

Study data to determine the parallels with today's events.

Excerpt:

ECONOMIC TIMELINE

The following timeline shows the order of economic events during the Great Depression. Notice the effect that deficit spending had on economic growth:

Receipts: Tax receipts as a percentage of the Gross Domestic Product

Spending: Federal spending as a percentage of the Gross Domestic Product

GNP: Percent change in the Gross National Product

Unemp.: Unemployment rate

       Tax       Federal    GNP       Unemp.
Year   Receipts  Spending   Growth    Rate
-------------------------------------------------
1929      --       --         --      3.2%  < Hoover era, Great Depression begins
1930     4.2%     3.4%     - 9.4%     8.7
1931     3.7      4.3      - 8.5     15.9
1932     2.9      7.0      -13.4     23.6
1933     3.5      8.1      - 2.1     24.9   < FDR, New Deal begins; contraction ends March
1934     4.9     10.8      + 7.7     21.7
1935     5.3      9.3      + 8.1     20.1
1936     5.1     10.6      +14.1     16.9
1937     6.2      8.7      + 5.0     14.3   < recession begins, May
1938     7.7      7.8      - 4.5     19.0   < recession ends, June
1939     7.2     10.4      + 7.9     17.2
1940     6.9      9.9 
1941     7.7     12.1 
1942    10.3     24.8  
1943    13.7     44.8  
1944    21.7     45.3  
1945    21.3     43.7

Wall Steet Shocked as Farmboy Paulson Repents

Quoting from Washington Post November 18th, By David Cho, "A Coversion In This Storm" 2008:



What I saw as a few key points of the article:


"A Republican, Paulson would bring government into some of Wall Street's most private quarters. He said banking regulators should have a major say in how financial firms compensate their executives and that the Federal Reserve should have the power to regulate any financial company it considers crucial, including hedge funds and private-equity firms. He added that the policy statement he crafted on hedge funds in January 2007, which stated they should not be regulated, was wrong.

In reshaping his philosophy, he has had to feel his way even as the once-familiar financial landscape shifted around him. Some senior government officials who worked with him said he invented much of the government's response on the fly."

"Paulson had long believed that free markets work only if companies, no matter how big or vital to the financial system, could pay for their mistakes by failing. Nothing is as powerful a motivator as the possibility of a collapse, he would say."

"While critics on Wall Street now accuse Paulson of inconsistency, some senior government officials said he has been ideally suited to grapple with a fast-moving and complicated financial meltdown. His shifting views, while startling, are not that surprising because his beliefs have never been grounded in ideology, these officials said.

"These are unprecedented times," said Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., who has worked closely with Paulson and occasionally clashed with him. "He doesn't have an ideological bias one way or the other. He's tried to be receptive as he developed responses, and to his credit, he is willing to go where folks have dared not to go in terms of regulation.""

"Paulson said he has become far more comfortable in Washington than in New York. An Illinois farm boy, he never adapted to the New York lifestyle, never enjoyed swinging deals along a golf course.

Even from the beginning of his tenure at the Treasury, it was clear that Paulson might break the mold. When he accepted the administration position in the summer of 2006, his allies on Wall Street urged him to revise the Sarbanes-Oxley Act, which was adopted in 2002 in response to a string of accounting scandals at Enron and other firms. The legislation had increased accountability for public companies but at some expense to their bottom line."

"Paulson said he has become far more comfortable in Washington than in New York. An Illinois farm boy, he never adapted to the New York lifestyle, never enjoyed swinging deals along a golf course.

Even from the beginning of his tenure at the Treasury, it was clear that Paulson might break the mold. When he accepted the administration position in the summer of 2006, his allies on Wall Street urged him to revise the Sarbanes-Oxley Act, which was adopted in 2002 in response to a string of accounting scandals at Enron and other firms. The legislation had increased accountability for public companies but at some expense to their bottom line."

"Paulson said he will urge Congress and the administration to grant the Fed broad discretion to examine the books of any firm, regulated or unregulated. This would require large hedge funds, private-equity firms and other now-unregulated financial entities to accept a charter from the Fed and open their financial records to its officials.

He added that executive compensation for financial firms also needs substantial reform, which could be accomplished partly through banking regulation.

Paulson said he pushed the five major federal banking agencies over the past weeks to release a guidance document that would require firms to eliminate compensation that encourages risky behavior by traders and executives."

"If the rescue does work, that will be a huge part of his legacy," said Bair, the FDIC chairman. "Even if it doesn't and we have to do other measures . . . I think history will view him favorably as someone who tried programs and took some risks and tackled this crisis with the best information that was available to him."