Archive for October, 2008

When your only tool is a hammer…

October 30, 2008 Leave a comment

Debt crisis expert Juan Enriquez details 10 non-partisan financial commandments for the President elect @ Pop!Tech ’08. Vodpod videos no longer available.

So here’s what we are thinking:

McCain has Joe the Plumber.

Pop!Tech has Juan the Debt Crisis Expert.

Each guy, more or less, shows up on cue and does whatever they are supposed to do.

Joe the Plumber arrives at your house lugging in his huge, heavy tools bag; slogs his way to your bathroom; and sets about fixing the nasty leak under your sink.

Everything’s fine, right?

You hired a plumber, and he plumbs with his plumbing thingies and finally gets all the plumbing…uh, plumbing…again. (We are not so clear on the technical aspects of this work, but we are pretty sure plumb stuff is somehow the point of the exercise.)

If, however, when Joe arrives you ask him to diagnose that odd lump growing on your back instead of fixing your sink, he probably will not have the tools in his bag to do the job – the guy’s got a wrench, and plunger, and one of those roto-rooter snakey whosits, so unless your medical complaint is constipation, he is not going to be of much help.

Which brings us to Juan the Debt Crisis Expert. He too, has a bag of tools which he uses to diagnose and fix problems.

Mr. Enriquez has an impressive resume, according to the Wiki:

Juan Enriquez was the founding director of the Life Sciences Project at Harvard Business School and a fellow at Harvard’s Center for International Affairs. His work has been published in Harvard Business Review, Foreign Policy, Science, and the New York Times. He is the author of As the Future Catches You and The Untied States of America. He works in business, science, and domestic/international politics.

Juan Enriquez is recognized as one of the world’s leading authorities on the economic and political impacts of life sciences. He is currently Chairman and CEO of Biotechonomy LLC, a life sciences research and investment firm.

The above list is definitely not exhaustive, and goes on to include such varied interests and experiences as the human genome project and peace negotiations with Mexican revolutionaries.

Juan’s tool bag, however, has nothing in it to fix our leaky sink.

And, more the pity, since, in all probability, he would charge us less than Joe the Plumber, and could hold an interesting conversation about Mexican revolutionaries, or, urban planning in Mexico, or, home-based human DNA sequencing as the next new profit opportunity for business – he has an MBAwhile we write out his check.

He also has these really neat slides like this one:

Which, as you can see, shows the stunning upward trendline for home prices between 1890 and 2008. If you have read some of the other things we wrote on this blog, the staggering increase in the price of a home shown here is no surprise.

Stated directly, if you own a home, as we do, you may see most of the market value in that home disappear in the very near future – already 20 percent of mortgages are underwater with just most recent minor pullback in home prices.

Our own home was purchased in 1991, when the home mortgage price just peeked above the long-term trend line – meaning, we will be among those who will likely find zero, or even negative appreciation once home market prices correct.

1991 was seventeen years ago. If you bought after us your problem is worse.

He also has this really interesting slide showing the nominal value of credit default swaps held by various financial institutions. We aren’t really sure what credit default swaps are – we have read a lot about them, and have had people patiently try to explain them to us, but the entire subject causes us no more good than helping us to nap more comfortably.

If you want to know about credit default swaps, you can begin here. But, we warn in advance, the entire discussion may cause an aneurysm.

What was so interesting about the slide is the nominal market value of the swaps: $54.6 trillion – which, as Juan the Debt Crisis Expert, points out is somewhat greater than the total output of the entire planet, and easily dwarfs the total output of the United States, as measured in GDP.

That is a pretty big number.

Okay fine. Somebody, or group of somebodies, controls more wealth than could be created by all the living members of our global community working for one year, and consuming, during that period, only air, water, and sunlight.

With that amount of wealth, one could only imagine what the owners might want to do with it. We wondered if it is possible for it to be put to work profitably, but, as Juan the Debt Crisis Expert informed us, it is more than twice the value of all the stocks on the New York Stock Exchange, several times the total output of the U.S. economy, and could easily payoff the national debt.

In fact, the owners of these odd things could purchase all of those combined, and still have some spare change left over to purchase most of the swanky parts of Latin America.

But, this is not a blog entry about credit default swaps, it is about the tools in Juan the Debt Crisis Expert’s, tool bag. He is proposing to fix our nasty little financial crisis, which appears, at least in part, the related to the absurdly large value of these credit default swaps.

We say, “appears,” because, in fact, these swaps are actually only pieces of paper – legal documents – which have no more than notional value until some of the somebodies actually tries to cash one in. And, this is the actual problem which threatens civilization as we know it: when they do try to cash one in and recover the value, there is no one to purchase it – giving the credit default swap an actual market value of zero.

But, to acknowledge this wealth as, “only pieces of paper,” is not the same as saying it is only paper wealth. To merely label it such overlooks its real significance for us: that it is a very particular form of wealth: frozen, immobilized, capital; and, as such, no longer capital at all – superfluous!

Money which cannot be exchanged for any good on demand – which is no longer accepted immediately in exchange for any good available for sale – is no longer money – no matter how lifelike the picture of the dead president on its face. Similarly, capital which cannot be placed back into circulation to create more capital is no longer capital.

This relatively sudden emergence of a mass of immobile capital is explained by Juan the Debt Crisis Expert this way:

  • There is too much debt, public, corporate and personal,
  • We have been living beyond our means for decades

Like Joe the Plumber, Juan the Debt Crisis Expert examined the nation’s toilet – sometimes referred to as Wall Street – and pronounced finally that it no longer flushes the future hopes and dreams of billions of Mankind’s children into the septic tanks of America’s debt manufacturers because the pipes are clogged with too much current effluence of their parents.

Juan the Debt Crisis Expert therefore advises, “We need to get serious about saving, cutting, working.” We must begin again to reintroduce that filthy expletive AUSTERITY back into the public discourse.

Which, no doubt, is a concept that appeals to you: it raises a sense of purpose in your heart, elevates your public spirit, and fills you with some morally uplifting hope for November 4th, when the nation will go to the polls and place its optimism for the future in the hands of a charismatic leader able to inspire a new American greatness.

Which is no surprise, since you were born into slavery; were bred explicitly to the task of enslaving yourself; cannot imagine yourself in any other circumstance than being a slave; and, have no greater hope for your children than they excel in hiring out their body parts to the highest bidder in the market, thus ensuring their slavery is a little less onerous than has been your lot in life.

All your life, you have worked and saved, only to watch your 401(k) get looted by short sellers and crooked Wall Street ponzi scam artists in the mutual funds industry.

All your life, you have seen government services cut, education of your children sacrificed, and millions of families like your own left without the most minimal European requirements of a social safety net.

All your life, and in every administration back to your earliest memory of a presidential address to the nation, some Republican or Democrat asshole has sat at a big desk, stared into a camera and solemnly declared the need for more sacrifice from people like you, even as they dumped another hundred billion into the laps of banks and businesses, who then advanced that same to you as a higher borrowing limit on your credit cards!

It took about 200,000 years of human evolution to produce someone as naive and gullible as the American voter – but, believe us, for folks like Warren Buffet and Bill Gates, the guys at Goldman Sachs, and the pimps at PIMCO it was well worth the wait.


As Bertrand Russell pointed out in the depths of the Great Depression, “borrowing made it appear as if the future was nourishing the present. But that, of course, would have been impossible; a man cannot eat a loaf of bread that does not yet exist.”

To live beyond your means can only mean you are living beyond your capacity to produce the things you consume. And, that is impossible. It is much the same as saying when a sub-prime mortgage goes to foreclosure, the home purchased with it no longer exists – it is somehow whisked away into the future.

So there must be something seriously wrong with the tools in Juan the Debt Crisis Expert’s bag. The measuring devices, oscillators, and black box imaging widgets seem to provide readings and results that are incompatible with basic common sense.

So far as we know, there has not been one report of a home suddenly disappearing when it was foreclosed, and the family occupying it expelled into the street. Nor, have we heard a single report of automobiles, Ipods, or 42 inch, wide-screen, high-definition, plasma televisions winking out of existence merely because their owner could no longer make payment.

We checked throughout the internet – trolling one after another site to confirm our conclusion – and, to our non-surprise, Iceland is still just about where it has always been – with its tiny population of inbred citizens – despite having gone functionally bankrupt in October.

We want to just make a leap, a risky game in any circumstance, but particularly in this case, since no society in human history has ever seen 62 trillion dollars of wealth disappear overnight, and suggest the so-called credit default swap crisis might be resolved without working harder, by doing one little thing.

And, it might also similarly resolve the problem of public, corporate and personal debt.

Just admit it has zero value, and will never be repaid: wipe it off the books; abrogate it officially.

You want to cut something Juan, cut that.

Oh, by the way: it’s going to happen anyway.

More about “Juan Enriquez (2008) Pop!Tech Pop!Cas…“, posted with vodpod

US has breached the point where it can service its debt

October 30, 2008 Leave a comment

From Jesse’s Café Américain:

We have seen estimates that next year the US will have to finance a $2 Trillion annual deficit. They may be able to push it further into the next Administration than that by the forbearance of the world, but not by much. We’d expect a significant drop in Treasuries by 2011 at the latest.

It should be obvious to anyone that we are approaching the apogee of the Treasury bubble, with the credit bubble having broken already.

When the Treasury says they are facing unprecedented challenges in financing the US public debt next year that is an understatement.

Once the deleveraging of the markets subsides, the dollar and Treasuries will drop, perhaps with some momentum, as the rest of the world realizes that the US has no choice but to default. This can be resolved in several ways, including continued subsidies from foreign sources in the form of virtual debt forgiveness, devaluation of the dollar, raising of taxes, and higher interest rates on debt.

The problem now is that the US has breached the point where it can service its debt out of real cash flows, and turning this around will require a severe devaluation of the US dollar.

Devaluation and selective default are the only foreseeable systemic alternatives. There are other exogenous paths of a more political nature such as consolidation and war that may color the default a slightly different color, but a selective default it remains.

This is the fundamental situation. Everything else is speculation and commentary.

Categories: Uncategorized

“Staring into the awful face of God…”

October 25, 2008 Leave a comment

Thank you Jehu for taking the time and thought to outline the answer to my question.

Yet, Francis Phalen’s reply to Rudy in the graveyard remains, “Don’t count on it.  Guys like him don’t let go of a good thing.”

Since the paradigm you describe is so counter to the present day paradigm that keeps all the people Francis is talking about in the only position from which to pull the levers of power, how do they begin to see your message as a Golden Path?  My guess is we all “stare into the awful face of God” together before anything like this is even considered.

Do you see this way of life being demanded from the bottom up?  I mean, all those who tuned into the latest episode of Survivor last night, will they see the wisdom or even necessity of this radical thought?  How does this changeover begin?

This is an excellent question – one which reveals not simply the conceptual requirements of a post-economic society, but also the key to understanding the very core of our own times as we stand on the event horizon between the epoch of scarcity and that of abundance.

It is precisely this radical view of our future which has been the driving force of American politics for the last thirty years. That we have not recognized it as such is, above all, symptomatic of the profound grip fascism has on the political and economic discourse.

(NOTE: I would say here, I apologize for returning to the idea that the Party of Washington is the party of fascism. I use it, however, not as a pejorative, but as an accurate description of its ideology. We have come to associate fascism as a rightist ideology, but in fact, if historians are to be believed, it began with the defection of its leaders from the left-wing parties of Italy. The Wiki features an interesting outline of the central economic tenets of fascism, among which is the idea of a “Third Way,” the uncanny resemblance to which you will immediately find in ideology of the Clinton Democrats, right down to the self-given label.)

Americans have been fighting for the reduction in working time for the last forty years!

Why this movement has never been recognized is simple: Americans’ attention has been focused on the chief form a too long work week takes, not on the problem itself.

As we stated earlier, government has expanded to monstrous proportions feeding on the superfluous working hours of society, and driving us to this present crisis. The chief symptom of the expansion of working time has been the expansion of government, and of taxes. Thus, we read this piece in a Massachusetts newspaper:

For years, Massachusetts was known derisively as “Taxachusetts.” But voters could help shed that label in November by completely eliminating the state’s income tax in a single stroke.

If approved, the ballot initiative would wipe out 40 percent of state revenues and give back to each taxpayer an average of $3,600.

The Massachusetts proposal is the most notable of several tax-cutting questions that will appear next month on ballots around the nation.

Others include a North Dakota initiative to cut individual income tax rates in half and trim corporate rates by 15 percent; an Arizona measure to mandate that any initiatives requiring spending or tax increases be approved by majority of all registered voters, not just those casting ballots; and a Maine plan to repeal new taxes on beer, wine and soda.

For forty years now, since well before the so-called Reagan Revolution, Americans have been waging a determined, if blind and unconscious, battle to push back against the ever lengthening work week, beginning, perhaps, with the Jarvis amendment against soaring property taxes in California in 1978. (There may have been earlier examples of this, but we are – we confess – mostly ignorant, and ignorant of them.)

The standard interpretation of the Jarvis campaign is that Republicans don’t like poor and minority people – which probably is true, since it spawned a whole generation of activists who targeted welfare queens and immigrants as the sole cause of all economic difficulties experienced in white suburbs.

However, contemporaneous explanations which relied on the racist ideology shared by the movement’s participants are entirely beside the point, since, as we know, the movement reflected not the economic pain caused by the coloreds but by the collapse of Bretton Woods, and the impact National Security Council Memorandum 68 had on deindustrializing the country.

And, we also know, black people and immigrants have always been blamed, in every period of American history, for every social disorder which has descended upon us, since the outbreak of witch hunts in Salem.

Blaming the coloreds is what Americans do.

Accepting this racism as the explanation for the actual political response of Americans to very real impact of economic events in their lives is what ignorant assholes on the left do.

A tax, of whatever form, and, by whatever level of government, is nothing more than the indirect extension of the working day. When government takes 20 percent of your paycheck you are forced to offset it by working longer hours, if you are to maintain your previous standard of living despite this loss.  How you accomplish this – by working longer hours directly, or adding new members of your household to the work force – is, of course, up to you – the politician doesn’t care one iota.

Likewise, the accumulation of government debt, in the form of bonds and notes, has this same effect. So, we read this in the above mentioned article on the Massachusetts income tax elimination proposition:

The state’s “Taxachusetts” label dates back to the 1980s, when Massachusetts had some of the highest tax burdens in the country.

Then-Gov. Michael Dukakis won the 1988 Democratic Party’s presidential nomination on the success of the so-called “Massachusetts Miracle,” but after his loss, the economy tanked.

Dukakis floated bonds to pay off the deficit, forcing lawmakers to hike the income tax rate from 5 percent to 5.95 percent in 1989, then to 6.25 percent in 1990. It later fell back to 5.95 percent.

The relentless incremental upward creep of taxes, and of public debt – which latter frees the incumbent politician from the political embarrassment of a sudden and massive rise in taxes while building into future budgets ever greater tax increases if they are to finally be repaid – exerts relentless downward pressure on the living standards of working families, leaving them vulnerable to the loss of their homes, living paycheck to paycheck, even forcing them into their own private debtors’ prison of credit cards, kited checks, and revolving accounts – making it impossible for them not to just achieve their modest dreams, educate their children, and retire with some level of comfort, but compelling them to sacrifice each current day in vain hope of someday simply breaking even, or, at the very least, not so broken as to end their days eating dog food.

And, it is right in this midst of this nightmare, this violent vision of our senior years, as we struggle to keep our families together, educated, housed, and fed, Washington comes to us and requests to borrow $700 billion from the Chinese government to bail out its retainers on Wall Street, who have all this time profited handsomely from the swollen public debt – gorging themselves on it to the point of insensibility and euphoria – and from our descent into the status of impoverished wage slaves standing the merest paycheck or illness from financial disaster.

Is it any wonder that, in response to this insult, working families of every political persuasion, without exception, flooded Congress with the singular demand to vote the request down? And, that the promise to reduce taxes is a necessary part of every political candidates platform?

So, in answer to your question: How does this changeover begin?

My answer is this: it has always been there. The first steps American working families took to express their separate interests were the establishment of organizations to demand shorter working time in this country in the 1800s.

As Robert Whaples observed:

[W]ith the continued rise of merchant capitalists, the transition from the artisanal shop to the early factory, and an intensified work pace had become widespread by about 1825. These changes produced the first extensive, aggressive movement among workers for shorter hours, as the ten-hour movement blossomed in New York City, Philadelphia and Boston. Rallying around the ten-hour banner, workers formed the first city-central labor union in the U.S., the first labor newspaper, and the first workingmen’s political party — all in Philadelphia — in the late 1820s.

Our failure has been not to realize that, since NSC-68, this became an immediately political demand – a demand aimed not at employers, who never let down their own fight against the idea of shorter working time, but against government which filled this superfluous working time with its own demands on the wallets and budgets of ordinary Americans, and, thus, on their time away from work.

This has been the single unconscionable failure of those who can imagine a life without work, and a society no longer organized by the requirements of scarcity.

Frankly, there has been no political force to put these two separate threads of the same movement together – tax reduction and shorter working time – and, it is unlikely that any will emerge in the near future – at least until such time as the Democratic Party’s candidate and likely next president, Barack Obama, crashes to earth in this ongoing crisis.

What isolated supporters of shorter working time there are, are wholly under the thrall of more taxes for programs they believe are necessary to the public space – mostly silly pie-in-sky projects to rebuild the infrastructure, improve schools, health care insurance, or to promote environmentally friendly methods of producing energy – none of which requires a dime more in public spending than is available today, and all of which could be done with the merest fraction of current public expenditures.

The leaders of the anti-tax movement, such as Carla Howell in Massachusetts, are hopelessly under the thrall of libertarian delusions that a reduction in the size of government can be realized while ignoring the fate of millions of working families who would be tossed into the streets, as they are summarily shoved off government payrolls and into unemployment – provoking the most astonishing cascade of mortgage and personal debt defaults, and a mass floating population of unemployed families easily eclipsing that of the Great Depression.

Nevertheless, the present crisis will do precisely both of these things: shorten the work week and reduce the size of government.

Unfortunately, it will probably do them both in the worst possible way as has already begun: through the bankruptcy and default of one after another national, state, and local government, and the accelerating layoffs of millions of working families, bankruptcy of the biggest industrial and commercial giants, and an impending tsunami of personal debt defaults. Perhaps in the middle of all this a bulb will pop on above someone’s head.

Until then, as you point out, we will all be “Staring into the awful face of God…”.

What is your vision of the shorter work week?

October 23, 2008 Leave a comment

We received the following emailed question from a friend, and since it is relevant to what we have discussed on these pages, we reprint it in full, along with our response.

I feel the need to ask this question.  I have no doubt of the need to shorten the work week.  For reasons I cannot place into words other than to say you have made a convincing argument understood by my reptilian understanding of economics.

My question is this: What is your vision of the shorter work week.  That is to say, if a person earns 100 dollars a day and thus 500 dollars a week, does that mean he will now earn 400 dollars a week?  How does this square with his need to pay for what he needs to live, food, shelter, clothing, etc. if the “price” for such things does not shrink in direct ratio to this steep drop in earnings?  If the price for such things does not change as well, does this not make it impossible to match in income the “costs” of living?

This is the piece of the puzzle that brings my understanding to a grinding halt.

If I am to go forth in the world making the argument that the need to shorten the work week is obvious, how do I answer this first logical question that I am at once confronted with?

Am I making my question clear?

Yes, you are perfectly clear, and perfectly correct that it difficult for people to understand. Part of the difficulty for me lies in translating the way I think about this into images people who are not at least also partly delusional can understand.

But let me try:

To begin, consider a factory which employs 100 persons, and which produces 42 inch, wide screen, high-definition, picture-in-picture, plasma televisions  and sells them with the expectation of a reasonable profit.

Of these 100 employees, 5 to ten actually work directly or indirectly producing the televisions sold by the company.

The other 90 to 95 employees spend the entire day doing each others hair and nails, giving back massages, advertising the company product to each other, running the company store, selling each other valuable real estate in the company cafeteria, running loan shark operations and football pools, or passing regulations declaring who among the employees can marry whom, how much of what drug each can use, how often in the course of the day their children must recite the Pledge of Allegiance or pray, and which neighboring factory to invade next.

As you might imagine, paying 95 employees, out of a 100 person work force, to simply hang around looking busy, when, in fact, they are doing nothing at all, adds quite a bit of cost to the price of those plasma televisions.

This is basically what has happened to our economy – 5 to ten percent of the labor force make real things, the rest make mischief, and add to the cost of those real things. That all this mischief, and all these costs occur outside the factory, rather than inside, is of no concern to us when it comes to understanding the effect a largely unproductive workforce has on the prices of real goods.

Inside or outside, it makes every thing more expensive that it otherwise would be.

However, there is a deliciously bizarre twist to this for the factory owner, as we will see:

Let us suppose the owner of that factory were to lay off this unproductive 95 percent of the work force: Now we have to ask who would buy all those spanking new plasma televisions?

This, of course, is no concern to him – he only wishes to reduce his costs of production, and still might export the televisions to some other area where the consumer might afford it. His former employees go hungry, but he can salve his conscience by donating his old $1000 suits to the local charity so they might be recycled to some poor slob to wear to his next job interview.

The problem is, however, in our economy this excess workforce is not inside the factory, where it can be quietly laid off. It is outside the factory in the economy, where they can add to the factory owner’s costs indirectly, and, in a way he can’t so easily offset – they haunt him, cause him to twist and turn each night as he fights to find a way to finally subdue them.

Each day he goes to work and lays off another hundred or so, yet, in the morning they appear again – outside the factory gates – as new indirect costs of production: wraiths asking to mow his lawn, give him a pedicure, personally shop for him; as, hedge fund managers, mistresses, county political operatives, DPW crews, a host of tax collectors, or, Navy Seals ready to plant small suitcase nukes in Tehran.

At McDonalds, or DB Bistro Moderne, in the form of a Corniche or a Hyundai – the carrying costs of a superfluous workforce makes itself felt in the generalized upward pressure on prices throughout society. However, relentlessly he trims his workforce, in equal measure, his indirect costs seem to rise.

We could have our factory owner run his operation from another nation, to no avail. Even there, as when he laid off the the first of his employees, rising prices threaten him: fluctuations in currencies soon crush whatever competitive advantage he seeks. He accumulates more, but only at the cost of spreading the disease of inflation throughout the global marketplace.

Of course, one cannot sidestep the problem of a superfluous mass of employed labor except by reducing it. Leaders of industry and government have tried in every manner to offset this cost by various means, and have all failed miserably.

And, there are only two ways to accomplish this: lay off millions in the current labor force – as is being done by companies and governments around the country – and leave them homeless and hungry. Or, reduce their working hours.

Either solution will lead to the rapid fall in prices, but only one will allow people to take advantage of this fall.

So, in answer to the question, “How does all this work?”: If the reduction of the work week is planned, the starting point is to enact this reduction COMBINED with a reduction in taxes equal to the lost wages.

  1. So, for instance, if we were to reduce the work week from 40 hours to 32, a working family paying 20 percent of its wages as taxes, would see their tax rate fall to zero – no payroll tax, no income tax, no state income tax – nothing. We would also want to assure ourselves that other silly taxes: sales, property, excise, etc. were subject to the same income test as well – or eliminated entirely.
  2. This reduction would be combined with offsetting cuts in government budgets, and all government would be required to run balanced budgets – the biggest trick practiced by Washington and government at every level is the issuing of bonds and notes to fund deficits – contributing to inflationary pressure on prices, and larding their rolls with nepotism and cronies.
  3. Public debt service would be eliminated, allowing government to live within their means and continue to deliver necessary services.
  4. Private debt would be eliminated as well, as this is simply a form of compulsory servitude – forcing working families into years of involuntary work to pay for over-priced goods. Without eliminating it, it would not be possible to further reduce the work week without threatening to push families out of their homes and into the street.

Reducing the work week, as is obvious from this incomplete list, is only the beginning. As important is reducing government, which has expanded to monstrous proportions feeding on the superfluous working hours of society, and driving us to this present crisis.

This is where I typically part with most on the left who share the same goal of a world with less work. They have adopted the problematic world view of a necessary role for government – a view, which, in my opinion, leads directly to the present crisis.

If pressed, they will admit government has more often worked for Wall Street than it has for working families. Yet, they find it difficult to conceive we might all be better off without it. The ideological grip of what can only be called an American version of fascism – populism – is too deeply embedded.

Yet, this crisis will do precisely everything I have indicated above – and more – before it is over.

The impending death of Conservative Socialism

October 23, 2008 Leave a comment

Brad DeLong wrote a piece that just begs to be read. In it, he examines the reason why, as he so elegantly states:

The Bush administration, having entered office as social conservatives, leaves office as conservative socialists, proprietors of the most sudden large expansion of the state’s role in the US economy since mobilisation for the second world war.

For Brad, the question is why this happened:

Why did they decide to partially and quasi-nationalise America’s banks – to invest $250bn in preferred stock plus warrants and tell the banks that it wanted them to use the capital to expand their loan base rather than contract it via deleveraging? It is certainly not what Henry Paulson signed up as Treasury secretary to do.

The question for us, however, as election day approaches and the Party of Wall Street plummets to earth, like John McCain’s fighter jet over the rice paddies of Vietnam, Moron in the cockpit (Mission Accomplished!) for an extended stay at the Obama Hilton, we wonder of the fate of his successor.

That tortured metaphor in place, we can proceed.

The rush of the Party of Wall Street into the safe embrace of its chief rival, the Party of Washington – so completely and handsomely expressed in the endorsement of Barack Obama by that lapdog of the House of Bush, Colin Powell, this past Sunday – the conversion of social conservatives to the conservative socialism of the Democratic Party, no doubt, causes you to consider the possibility that this event heralds not simply the collapse of the former, but also the timely demise of the latter.

In this, you are indeed one step ahead of us, knowing, full well, that without Wall Street, Washington can not function in the old way.

Conservative or not, the faint socialism of Washington’s variety – itself the faintest reflection of the no less faint European reflection of 19th Century Socialism – rests on the most vibrant practice of full blooded Wall Street ponzi schemes erected from a stable base of dollar reserves, easy credit, and an ever lengthening social work day.

Until now, the Party of Washington‘s most convincing argument on behalf of its conservative socialism – read: Social-Fascism (Yes, we did use the “F” word, now clap your hands over your eyes!) – consisted almost entirely of its alleged role in protecting the rest of us from the predatory practices of Wall Street.

One of the intellectual apologists for this “function” of Washington is the economist Jared Bernstein, who wrote some time ago:

… we live in a complex world, where markets can provide only partial solutions to the challenges we face. Market failures abound, and government will unquestionably be called upon to repair these failures. For years, we’ve elected politicians who’ve railed against this reality, pretending that they can refund that fifth of the economy that we spend on government –”it’s your money!”– and still provide the services we want and need. To put it mildly, it hasn’t worked. We’re spending the same share as ever, yet we’ve squandered years when we could have been making progress against the challenges of globalization, of environmental degradation, of deteriorating infrastructure, of economic inequality, of costly inefficiencies in health care.

The only problem with this delusion of Mr. Bernstein: precisely at the time the Party of Wall Street has finally and completely conceded its bankruptcy – both ideological and actual – and turned to the Party of Washington for Bolsheviki Salvation, Washington is itself insolvent, and, under the grinding crush of an unprecedented post-War economic downturn.

Washington may not only be unable to help its retainers on Wall Street, but itself as well.

It is clear industry is faltering, state and local government are facing defaults, unemployment is rising, housing mortgage, and consumer debt defaults continue to increase, pension and retirement funds teeter ominously.

In January, the victorious Party of Washington will face this daunting environment, armed only with the treasury’s printing press, a somewhat fearful community of central banks seeking the safest possible investment instruments in a rapidly deflating economic bubble, and an extremely attenuated ideology to repair what are now being called the “excesses of Wall Street,” but really is a watershed moment for humanity.

Good luck, guys!

Nassim Nicholas Taleb: “Never in the history of the world…”

October 23, 2008 Leave a comment

Interesting interview with Mr. Taleb, author of the book, The Black Swan, on PBS:

BENOIT MANDELBROT: That is not well-understood. In fact, that is misunderstood for which tools have been developed which assume that changes are always very small.

If one of them comes, nothing bad happens. If several of them come together, very bad things have happened. And the theory does not take account of that, and the theory doesn’t take account of very large and sudden changes in anything.

The theory thinks that things move slowly, gradually, and can be corrected as they change, whereas, in fact, they may change extremely brutally.

NASSIM NICHOLAS TALEB: Now you understand why I’m worried. I hope I’m wrong. I wake up every morning — actually, I don’t wake up every morning now. I start to wake up at night the last couple of weeks hoping that I’m wrong, begging to be wrong.

I think that we may be experiencing something that is vastly worse than we think it is.

A rather brutal and passimistic prediction which, as one might expect considering the looking glass nature of capitalist market relations, sees the approaching end of the epoch of scarcity as catastrophe.

A view we share since the only means of avoiding said catastrophe is to recognize the epoch of scarcity is ending – something which, so far, appears beyond the intellectual capacity of even our most far sighted members.

When it was “different this time”: A reflection on the wisdom of Lord Keynes

October 21, 2008 2 comments

The Financial Times has an interesting article on renewed interest in Lord John Maynard Keynes, the gist of which is captured in this excerpt:

The heart of [Keynes book, The General Theory of Employment, Interest and Money] is the idea that economic downturns are not necessarily self-correcting. Classical economics held that business cycles were unavoidable and that peaks and troughs would pass. Keynes contended that in certain circumstances economies could get stuck. If individuals and businesses try to save more, they will cut the incomes of other individuals and businesses, which will in turn cut their spending. The result can be a downward spiral that will not turn up again without outside intervention.

What the Financial Times fails to mention, is that, up until the Great Depression, economic downturns were self-correcting.

The intellectual elite of the nation were alledgedly confused at this empirical refutation of all their grand theories on how the world worked to such an extent the most honest among them began to question the validity of the existing order itself.

According to Nobel Laureate Paul Krugman:

A reasonable man might well have concluded that capitalism had failed, and that only huge institutional changes – perhaps the nationalization of the means of production – could restore economic sanity. Many reasonable people did, in fact, reach that conclusion: large numbers of British and American intellectuals who had no particular antipathy toward markets and private property became socialists during the depression years simply because they saw no other way to remedy capitalism’s colossal failures.

And, by failing to note the “minor” fact that the Great Depression was something different, the FT is not required to ask the crucial question: Why was the Great Depression different? Krugman admits as much when he writes:

Although Keynes speculated about the causes of the business cycle in Chapter 22 of The General Theory, those speculations were peripheral to his argument. Instead, Keynes saw it as his job to explain why the economy sometimes operates far below full employment. That is, The General Theory for the most part offers a static model, not a dynamic model – a picture of an economy stuck in depression, not a story about how it got there. So Keynes actually chose to answer a more limited question than most people writing about business cycles at the time.

Again, I didn’t understand the importance of that strategic decision on Keynes’s part the first time I read The General Theory. But it’s now obvious to me that most of Book II is a manifesto on behalf of limiting the question. Where pre-Keynesian business cycle theory told complex, confusing stories about disequilibrium, Chapter 5 makes the case for thinking of an underemployed economy as being in a sort of equilibrium in which short-term expectations about sales are, in fact, fulfilled. Chapter 6 and Chapter 7 argue for replacing all the talk of forced savings, excess savings, and so on that was prevalent in pre-Keynesian business cycle theory – talk that stressed, in a confused way, the idea of disequilibrium in the economy – with the simple accounting identity that savings equal investment.

And Keynes’s limitation of the question was powerfully liberating. Rather than getting bogged down in an attempt to explain the dynamics of the business cycle – a subject that remains contentious to this day – Keynes focused on a question that could be answered. And that was also the question that most needed an answer: given that overall demand is depressed – never mind why – how can we create more employment?

Thus, for all the renewed interest in the theories of Lord Keynes, with his insights into the problem of persistent unemployment we are no closer to understanding what actually happened in 1929 which was different from the many depression, panics, and dislocations which occurred from about 1830 onward, for which the standard responses of a balanced budget and patience had become the accepted wisdom.

And, it was precisely this accepted wisdom which so miserably failed in addressing the profound problems of the Thirties. Something had changed, and this alteration in economic circumstance made the conventional wisdom obsolete. Moreover, it threatened the existing order, disorganized that order’s chief defenders, and presented Washington, Wall Street, and their intellectual apologists with such dire implications as a full scale revolt among the class of hungry wage slaves.

Those latter would be our parents and grandparents – that’s right, they suspected your grandparents of harboring the same Bolshevik sympathies which are alleged to be held by Barack Obama today. What fools these Republicans are: Barack Obama wouldn’t have had the balls required to carry the ammo belt for your grandparents if they had actually decided to storm the Congress and the White House in those days.


To add a twist to this imperfect and amateur stab at economic history we should acknowledge that everything stated above about economists being confused about the causes of the Great Depression is pure bunk.

In fact, it was common knowledge, drawn on much empirical study of the details of industrial production, that capitalism was generating such massive surplus output of every kind of good the working day would have to be reduced sooner or later, or capitalism itself would collapse.

And, let us be completely clear on this point: Karl Marx explicitly outlined a path of social development wherein the distribution of the social product of labor would evolve from one based on wages – to each according to his work – to one no longer bound by the requirements of scarcity – “To each according to his needs.” He knew the progressive improvement in the productivity of society was bringing the age of scarcity to a close, and spent the better part of his life writing about it.

Lord Keynes, unlike worthless modern day hacks, such as Nobel Laureate Paul Krugman, was completely familiar with the works of Karl Marx, and even directly references him in the opening pages of the above mentioned book.


Bertrand Russell

Beyond Marx’s explicit outline of the transition to a post-economic society, a society no longer bound by the laws of scarcity, Lord Keynes had the advantage of conventional wisdom which also explicitly stated the length of the working day would have to be shortened. Among them was his colleague and friend, Bertrand Russell, who wrote these words fully four years before the publication of The General Theory of Employment, Interest and Money:

I want to say, in all seriousness, that a great deal of harm is being done in the modern world by belief in the virtuousness of work, and that the road to happiness and prosperity lies in an organized diminution of work.

First of all: what is work? Work is of two kinds: first, altering the position of matter at or near the earth’s surface relatively to other such matter; second, telling other people to do so. The first kind is unpleasant and ill paid; the second is pleasant and highly paid. The second kind is capable of indefinite extension: there are not only those who give orders, but those who give advice as to what orders should be given. Usually two opposite kinds of advice are given simultaneously by two organized bodies of men; this is called politics. The skill required for this kind of work is not knowledge of the subjects as to which advice is given, but knowledge of the art of persuasive speaking and writing, i.e. of advertising.

Throughout Europe, though not in America, there is a third class of men, more respected than either of the classes of workers. There are men who, through ownership of land, are able to make others pay for the privilege of being allowed to exist and to work. These landowners are idle, and I might therefore be expected to praise them. Unfortunately, their idleness is only rendered possible by the industry of others; indeed their desire for comfortable idleness is historically the source of the whole gospel of work. The last thing they have ever wished is that others should follow their example.

Not to be confusing on this point, Bertrand Russell adds this lesson of history:

The morality of work is the morality of slaves, and the modern world has no need of slavery.


Sir Sidney Chapman

One may ignore the opinions of one’s friends in this matter, and certainly it is acceptable to ignore the Father of Communism in every matter, yet, Keynes needed not only to ignore the above commonly known views, but also the views of some of his most honored contemporary economists, including Sir Sidney Chapman, author of Hours of labour, in The Economic Journal (vol. 19, pp. 353-373) who was, according to his biography in the Wiki, President of the Economics and Statistics Section of the British Association for the Advancement of Science; Joint Permanent Secretary of the Board of Trade; Commander of the Order of the British Empire; Companion of the Order of the Bath; and, Knight Commander of the Order of the Bath.

And, further, notes the Wiki:

In 1915, he was asked by the Board of Trade to head inquiries into wartime industrial organisation, initially on a part-time basis, but later full-time… [and] In 1927 he was appointed Chief Economic Adviser to HM Government and held the post until 1932, when he became a member of the Import Duties Advisory Committee until his retirement shortly before the outbreak of the Second World War in 1939. During the war he served on the Central Price Regulation Committee and was Controller of Matches.

As Tom Walker points out:

Chapman’s analysis arrived at several remarkable and far-reaching conclusions. First, the length of working day that would be best for workers’ welfare is shorter than the length that would produce the largest output. Second, the play of competition would tend to make the working day too long, even from the standpoint of production. Third, improved methods of production would lead to a progressive reduction of the optimal length for the working day. As a consequence, renewed conflict over the length of the working day would break out from time to time.

Lord Keynes was not only familiar with the works of Sir Chapman, he directly critiques the work of A.C. Pigou, who, according to Walker, “based his own discussion of working time in The Economics of
on Chapman’s theory.”

Lord Keynes, therefore, did not simply neglect to discuss the causes of the Great Depression – how mass unemployment is possible in the first place” in the words of the Nobel Laureate, and useless political hack wannabe, Paul Krugman – he chose to ignore nearly a century of acquired wisdom in social criticism, economics and a throrough going examination of the capitalist production process – both theoretical and empirical – by such disparate figures as the highly honored men of the British Empire and its most hated avowed enemies.


Supply and Demand Curve

Supply and Demand Curve

In place of this accumulated wisdom, Lord Keynes substituted a proposal for a mechanism of government intervention which has now resulted in a massive sixty year old bubble economy – a bubble which now threatens to implode, and which may result in the single most catastrophic economic event in mankind’s long history if it is not reversed in an orderly fashion.

The outline of this substitution, as set forth by Krugman:

Economies can and often do suffer from an overall lack of demand, which leads to involuntary unemployment

The economy’s automatic tendency to correct shortfalls in demand, if it exists at all, operates slowly and painfully

Government policies to increase demand, by contrast, can reduce unemployment quickly

Sometimes increasing the money supply won’t be enough to persuade the private sector to spend more, and government spending must step into the breach

By concentrating on an economic abstraction, demand, Lord Keynes was able to sidestep the very question thrown up by the massive and unprecedented persistent unemployment of the Great Depression. As World War II proved, there was no shortage of productive capacity to create enormous amounts of goods of every description, and employ miilions who had suffered relentless poverty and stood in soup lines or drifted westward in search of jobs.

That is, there was no shortage as long as the goods were armaments of unprecedented ferocity, and those millions engaged either in producing them, or using them on the bloodiest battlefields in human history. The actual shortage was the opportunity to make massive profits producing anything other than horrendous engines of annihilation.

As one would expect, a social organization based on the assumption of fundamental scarcity in all the goods society consumed – the market – failed to allocate these same goods once they became abundant. As consumer products became abundant – which is to say, as society gained the capacity to produce more of everything than was immediately needed – the prices of the goods dropped below their costs of production; profits fell to zero; and, the owners of the productive stock of society – factories, farms, etc. – took this as a signal to stop producing – in the process laying off millions of employees – and, to stop investing further in the companies they owned.

And, with millions now suddenly thrown into the streets, the demand for the goods they had consumed fell even further – the key word, demand, here meaning, simply, unemployed working families did not have the wages to purchase what they themselves had produced.

It is important that you understand this: it wasn’t that people weren’t hungry, homeless, and in need of what they had produced with their own hands, THEY DID NOT HAVE THE WAGES WITH WHICH TO PURCHASE WHAT THEY NEEDED.

Demand, is a term used by that most crippled of human beings, the economist, to denote another less fortunate human being – typically, not an economist – having both the need for a loaf of bread AND the means to purchase it.

In other words, Lord Keynes was saying capitalism had placed an insurmountable barrier between the needs of millions of unemployed and the satisfaction of these need – cash.

Since, wages slaves like us have nothing to exchange for the goods we need to live, save our own bodies, which we hire out to the highest bidder like a twenty dollar hooker in an alley along Wall Street, not being able to prostitute ourselves, one Donald or Warren at a time, is quite the same thing as being left to starve – a starving wage slave is NOT an economic category you can plot on a curve.

What Keynes showed is that governments could step in and provide this lost demand with the printing presses of the treasuries of every country – substituting its own demand for that of the unemployed wage slaves like us, and then pay us to slaughter the wage slaves of other countries, or produce the means to slaughter them.

Happy with this solution, every major nation in Europe, Asia, and America immediately began printing their currencies as quickly as possible, building incredible engines of mass murder, and, when they felt themselves strong enough to despoil their neighbors’ homes, industries and civilian populations, launching the most amazing acts of racial suicide ever to be witnessed by God or man.

An event for which we will always be able to thank Lord Keynes, who proved we are truly as unworthy of divine breath as we have always been taught by priests, rabbis, imams and assorted other instigators of communal guilt and insecurity.


It is for this reason, we hold there is no danger of another Great Depression.

And the reason for this assertion is simple: the first Great Depression is still alive and in good health beneath the illusory prosperity of our own time – an iceberg hidden just beneath the murky waters of our economy as the grand ship of state plows forward with the cast of Gilligan’s Island firmly in command.

Which is just another way of saying this:

For all the economic dislocation rendered thus far in the present crisis, with the disappearance of the five big global investment banks, the collapse of AIG, the nationalization of Freddie and Fannie, the partial or complete nationalization of the banking industry of virtually every major nation, the momentary cessation of interbank lending, the serious interruption of international trade, and, the collapse of the stock markets of every major financial center on the planet, things are poised to get much, much worse.

Worse, as in the Great Depression was sixty years ago, and in that time the productive capacity of society has likely at least quadrupled, implying as much as 90 percent unemployment, if there is any employment at all for anyone not wearing a uniform, when the bubble erected according to the wisdom of Lord Keynes finally gives way.

Avoiding this disaster – if it can be avoided – is the historical necessity of the moment, and starts with the immediate reduction of the work week.

Non compos mentis: The case against Mr. Market

October 18, 2008 1 comment

Pictured above is a graph showing periods of recession in the United States since the end of World War II.

Generally speaking, the periods of economic downturn have been greeted with much anguish and gnashing of teeth, as massive dislocations of economic activity subject millions of working families to the most dangerous of modern circumstances: being cut off from employment.

The danger of unemployment is a constant haunting fear among us, because, of course, without wages, all the things which can be purchased by our private collection of dead presidents are thereby removed from our reach as well – little things, like food, clothing, shelter, warmth, and Iphones.

For this very reason, when Mr. Market suddenly develops a nasty little rage and declares: “I am not going to play this game anymore for a while,” we react with the profoundest of dismay, imagining the imminent loss of home and hearth, and our inevitable association with the ranks of ne’er-do-wells who often approach us with filthy rags and offer to clean the windshields of our twin his-and-her Hummers in return for some small handout.

There have been ten such incidents of recession since World War II, and, it is likely we are in the middle of number 11 – a recession, on average, every 6 years for the past sixty.

Mr. Market, having previously experienced the euphoric highs of manic economic outbursts suddenly seems to tire of his burst of creativity and industriousness, and completely goes off his medications much to the dread of folks like us who work for a living.

Lord Keynes, the noted doctor of economically bipolar societies, gave the world a way to ease these bouts of what the ill-famed McCain economic adviser, Dr. Phil Gramm, called “mental recessions,” by prescribing a high dose of economic manipulation including a massive infusion of cash into the pockets of whoever was standing close to a Washington politician at the time, or in the vicinity of a ballot box, along with easy credit terms to make it possible for the rest of us to revive our flagging consumer confidence by charging homes, autos, appliances, furniture and Iphones to our global credit card.

Each time Mr. Market appeared to be falling into his SEXENNIAL funk, Washington provided two of Lord Keynes little green pills, and – voila! – Mr. Market would be off and running again.

Of course, during this entire time Mr. Market has been screaming at Washington, denying he was ever actually bipolar. His diagnosis was, he protested, a monumental instance of economic malpractice, a misdiagnosis akin to declaring, as was done at the time, that homosexuality was a psychiatric disorder brought on by overbearing mothers and the absence of strong (read: abusive, controlling, or otherwise, domineering) fathers.

He was, he protested, only responding to changes in the behavior of his members – it turned out, Mr. Market, in his delusion of grandeur, claimed to not be a man at all, but the collective actions of billion of individuals who entered into economic relationships to provide for all the needs of society.

He was, it was revealed, hearing voices, seeing apparitions of several billion people, who, he asserted, were causing all the mischief attributed to him.

We caught up with Mr. Market, who is now in convalescence in Washington, under the care of Doctors Hank Paulson, GS, and Ben Bernanke, EDU, to inquire at his health. You may want to remove the children from this blog, as the interview did not go well.

“In good times…”

Mr. Market spoke irritably,

“…you vastly increase your productive capacity; generating hundreds of millions of products of every description in less time than you did before until your stores and warehouses virtually overflow with anything and everything you might need to satisfy your every whim.”

He waved one arm in the general direction of the window, pointing with some disgust on his face, at the entire world of wealth just outside the Emergent Care Facility in the Treasury department.

“In such times, I, being merely responsible for allocating only those products that are scarce, reveal I have no power to allocate those things which are in such abundance. When this happens, you claim I am somehow delusional, sick, mad, or otherwise in a condition you call, recession.

Mr Market, rose from his seat abruptly, and moved toward us menacingly. Were we of lesser courage, we might have scurried into a corner to hide behind the neatly stacked, newly minted, pictures of long deceased men of history, which were being force fed to the disordered old gentleman almost hourly.

“In point of fact, it is you who are delusional; you, who declare I am the cause of things over which I have no control; you, who toss yourselves onto the streets, unemployed, throw all you have and hold dear into the direst of circumstances, and destroy all that provides you the means to life as if it were a toxic substance from which you must withdraw on pain of poverty.”

Spittle slapped us in the face, his great gray beard was speckled with loose change from earlier feedings. As the oldest known living man-made organism on Earth, Mr. Market – once an imposing figure – has been reduced to a frail, spindly character, with a pronounced awkward, distressed bent, and visibly receding features.

Presidential candidate John McCain has stated only a short time ago the fundamentals of Mr. Market were strong. But, to our eyes, it was clear he is dying and has been dying for some time. Things are spinning out of his control; his ancient arthritic hands, which, invisible, once moved spices from the Orient to the city-states of Italy, and exchanged Boston rum for African slaves, were seized with such contorted deformities as to barely hold his hospital gown in place.

“If George Bush hates black people, and is to be much in disregard on this account, what am I to think of you, who so hates yourself, the very things you have created with your own hands, and the abundant product of your own labor, that you would destroy it so that you might again be happily in poverty.”

We sat back in our seats, fearful of angering him further. He leaned into us – his breath smelling of centuries of pillaged villages, slave markets, battlefields corpses. His eyes, absent any luster, swam with images of girl children sold for food, flaming Indian brides, and, the occasional kidney given in exchange for a bottle of cheap wine.

“My God! What fools you are! All you have to do when the economy goes into a recession is reduce the work week. A recession is just my way of telling you your work week is too long. How stupid do you have to be not to see this?”

We made to interrupt, he dismissed us with  spittled rejection:

“For sixty years you have closed factories, plowed food under the earth, let homes stand unoccupied, and thrown millions among you into homeless shelters and food pantries just to preserve a regime scarcity. And for what? So you can once again enter a condition which is intolerable to you: subservience and groveling before people who use the word “impact” as a verb? And, yet, it is I who suffers some mental disorder?”

Bearing to hear no more of the insane muttering of this broken hero of history, we pressed the panic button given to us by the hospital staff. In rushed several orderlies – well dressed eager young men in thousand dollar suits, and fresh haircuts, carrying coin buckets which they emptied forcefully onto the madman until his fevered ravings were drowned beneath the ka-ching, ka-ching, ka-ching of faux gold.

As we exited, we heard him feebly call out one final threat:

“You won’t get away with this for much longer. Some day, the stimulus won’t work anymore, you’ll have to figure out what to do with your spare time…”

He declared with a mad cackle, as the young men in $500 shoes, struggled to force another thick suppository of hundred dollar bills into his wrinkled anus,

“…All of you will actually have to get a real life!”

His words haunted us as we left the room. Somehow, the muttering of this deranged mind almost made sense to us – uninitiated as we are to the arcane science of economic disturbances.

As is typical of our reaction to emotionally disturbed members of society, Washington took this outburst for a further confirmation of the diagnosed disorder, and upped Mr. Market’s meds, by seizing the banks and forcing more stimulus into his languid corpus via direct injection.

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Unemployment: We’re gonna need a bigger boat…

October 17, 2008 Leave a comment

Sorry, no bailout for you

States are already beginning to run out of unemployment funds, and this downturn has only started. Years of underfunding their plans, combined with this year’s spurt in unemployment have drained state resources.

They will be compelled to stand in line behind Wall Street banks looking for handouts from the Moron and Washington – a line which is getting longer with the addition of bonds insurers, like Ambac, who have presented Treasury Secretary Hank Paulson a plan to buy their toxic assets as well..

According to CNN:

“There are some real serious problems with unemployment funding that need to be addressed,” said Andrew Stettner, deputy director of the National Employment Law Project, a policy group that advocates on behalf of unemployed and low-wage workers.

The group, which tracks legislation and activity related to state and federal unemployment benefits, says that California, Michigan, Missouri, New York, Ohio, South Carolina, Wisconsin, Indiana, Kentucky and Arkansas have less than six months’ worth of unemployment trust fund reserves, putting the funds at high risk of insolvency.

We’re gonna need a bigger boat…or a shorter work week.

You decide.

The future results of our own actions…

October 17, 2008 Leave a comment

There is only one solution to this crisis, and it was indicated by Col. Andrew Bacevich in his interview posted here earlier:

The US must dismantle its military. The proceeds of the savings from this must be directed to American taxpayers with large tax reductions to offset decades of stagnant wages and income. The Federal budget must be brought into balance with elimination of all unnecessary spending.

Once the exhorbitant costs of empire are reduced, it will be possible for the US to again begin to export.

Above all,  the work week must be reduced at least to 20 hours.

This is not a suggestion – this crisis is precisely aiming at compelling the US economy to produce such results.

If the next administration does not take proactive measures along these lines, these very same results will be produced in the worst forms: extremely high unemployment, massive budget deficits, a rapidly slowing international trade environment, and, ultimately, the default of the American government on its obligations.

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