The coming (and presently here) Depression

[wmbwinn]

http://finance.yahoo.com/banking-bud...on-the-Economy

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You have heard that Fannie and Freddie, their gentle names notwithstanding, may cripple the financial system without a large infusion of taxpayer money. You have gleaned that jobs are disappearing, housing prices are plummeting, and paychecks are effectively shrinking as food and energy prices soar. You have noted the disturbing talk of crisis hovering over Wall Street.

Something has clearly gone wrong with the economy. But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.

Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.

"The open question is whether we're in for a bad couple of years, or a bad decade," said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.

Is This a Recession?

Officially, no. The economy is not in recession until a panel at a private institution called the National Bureau of Economic Research says so. Unofficially, many economists think a recession started six or seven months ago, even as the economy has continued to expand -- albeit at a tepid pace.

Many assume that if the economy expands at all, then it isn't a recession, but that's not true. The bureau defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months." If enough people lose their jobs, factories stop making things, stores stop selling things, and less money lands in people's pockets, it is probably a recession.

Whatever it is called, it is a painful time for tens of millions of people. Indeed, this may turn out to be the most wrenching downturn since the two recessions in the early 1980s; almost surely worse than the recession that ended the technology bubble at the beginning of this decade; perhaps worse than the downturn of the early 1990s that followed the last dip in real estate prices.

But, despite what some doomsayers now proclaim, this is not the Great Depression, when unemployment spiked to 25 percent and millions of previously working people woke up in shantytowns. Not by any measure, even as your neighbors make cryptic remarks above dusting off lessons passed down from grandparents about how to turn a can of beans into a family meal.

How Bad is Housing?

Bad in many markets, awful in some, and still O.K. in a few.

The downturn has its roots in the real estate frenzy that turned lonely Nevada ranches into suburban ranch homes and swampland in Florida into condominiums. Speculators drove home prices beyond any historical connection to incomes. Gravity did the rest. After roughly doubling in value from 2000 to 2005, home prices have fallen about 17 percent -- and more like 25 percent in inflation-adjusted terms -- according to the widely watched Case-Shiller index.

Even so, most economists think house prices must fall an additional 10 to 15 percent to get back to reality. One useful measure is the relationship between the costs of buying and renting a home. From 1985 to 2002, the average American home sold for about 14 times the annual rent for a similar home, according to Moody's Economy.com. By early 2006, home prices ballooned to 25 times rental prices. Since then, the ratio has dipped back to about 20 -- still far above the historical norm.

With mortgages now hard to obtain and speculation no longer attractive, arithmetic has replaced momentum as the guiding force for housing prices. The fundamental equation points down: Even as construction grinds down, there are still many more houses on the market than there are people to buy them, and more on the way as more homeowners slip into foreclosure.

By the reckoning of Economy.com, enough houses are on the market to satisfy demand for the next two-and-a-half years without building a single new one.

The time it takes to sell a newly completed house has expanded from an average of four months in 2005 to about nine months, according to analysis by Dean Baker, co-director of the Center for Economic and Policy Research.

And many sales are falling through -- more than 30 percent in some parts of California and Florida -- as buyers fail to secure financing, exacerbating the glut of homes, Mr. Baker said.

No wonder that in Los Angeles, San Francisco, Phoenix and Las Vegas, house prices have in recent months declined at annual rates of more than 33 percent.

When Will Banks Revive?

So far, they have written off more than $300 billion in loans. Many experts now predict the toll will rise to $1 trillion or more -- a staggering sum that could cripple many institutions for years.

Back when home prices were multiplying, banks poured oceans of borrowed money into real estate loans. Unlike the dot-com companies at the heart of the last speculative investment bubble, the new gold rush was centered on something that seemed unimpeachably solid -- the American home.

But the whole thing worked only as long as housing prices rose. Falling prices landed like a bomb. Homeowners fell behind on their loans and could not qualify for new ones: There was no value left in their house to borrow against. As millions of people defaulted, the banks confronted enormous losses in a bloody period of reckoning.

In March, the Federal Reserve helped engineer a deal for JPMorgan Chase to buy troubled investment bank Bear Stearns. Many assumed the worst was over. But, this month, the open distress of Fannie Mae and Freddie Mac -- two huge, government sponsored institutions that together own or guarantee nearly half of the nation's $12 trillion in outstanding mortgages -- sent a signal that more ugly surprises may lie in wait.

To calm markets, the government last weekend hurriedly put together a rescue package for Fannie and Freddie that, if used, could cost as much as $300 billion. The urgent need for a rescue -- together with another round of billion-dollar write-offs on Wall Street -- has unnerved economists and investors.

"I was a relative optimist, but I've certainly become more pessimistic," said Alan S. Blinder, an economist at Princeton, and a former vice chairman of the board of governors at the Federal Reserve. "The financial system looks substantially worse now than it did a month ago. If the Freddie and Fannie bailout were to fail, it could get a hell of a lot worse. If we get more bank failures, we have the possibility of seeing more of these pictures of people standing in line to pull their money out. That could really scare consumers."

In one respect, Mr. Blinder added, this is like the Great Depression. "We haven't seen this kind of travail in the financial markets since the 1930s," he said.

More than two years ago, Nouriel Roubini, an economist at the Stern School of Business at New York University, said that the housing bubble would give way to a financial crisis and a recession. He was widely dismissed as an attention-seeking Chicken Little. Now, Mr. Roubini says the worst is yet to come, because the account-squaring has so far been confined mostly to bad mortgages, leaving other areas remaining -- credit cards, auto loans, corporate and municipal debt.

Mr. Roubini says the cost of the financial system's losses could reach $2 trillion. Even if it's closer to $1 trillion, he adds, "we're not even a third of the way there."

Where will the banks raise the huge sums needed to replenish the capital they have apparently lost? And what will happen if they cannot?

The answers to these questions are unknown, an unsettling void that holds much of the economy at a standstill.

"We're in a dangerous spot," said Andrew Tilton, an economist at Goldman Sachs. "The big threat is more capital losses."

Banks are a crucial piece of the economy's arterial system, steering capital where it is needed to fuel spending and power growth. Now, they are holding tight to their dollars, starving businesses of loans they might use to expand, and depriving families of money they might use to buy houses and fill them with furniture and appliances.

From last June to this June, commercial bank lending declined more than 9 percent, according to an analysis of Federal Reserve data by Goldman Sachs.

"You have another wave of anxiety, another tightening of credit," said Robert Barbera, chief economist at the research and trading firm ITG. "The idea that we'll have a second half of the year recovery has gone by the boards."

Is My Job Safe?

Economic slowdowns always mean job losses. Unemployment already has risen, and almost certainly will increase more.

The first signs of distress emerged in housing. Construction companies, real estate agencies, mortgage brokers and banks began laying people off. Next, jobs started being cut at factories making products linked to housing, from carpets and furniture to lighting and flooring.

But as the real estate bust spilled over into the broader economy, depleting household wealth, the impacts rippled out to retailers, beauty parlors, law offices and trucking companies, inflicting cutbacks throughout the economy, save for health care, farming and energy. Over the last six months, the economy has shed 485,000 private sector jobs, according to the Labor Department. Many people have seen hours reduced.

The unemployment rate still remains low by historical standards, at 5.5 percent. And so far, the job losses -- about 65,000 a month this year -- do not approach the magnitude of those seen in past downturns, particularly the twin recessions at the beginning of the 1980s, when the economy shed upward of 140,000 jobs a month and the unemployment rate exceeded 10 percent.

But Goldman Sachs assumes unemployment will reach 6.5 percent by the end of 2009, which translates into several hundred thousand more Americans out of work.

These losses are landing on top of what was, for most Americans, a remarkably weak period of expansion. From 1992 to 2000 -- as the technology boom catalyzed spending and hiring -- the economy added more than 22 million private sector jobs. Over the last eight years, only 5 million new jobs have been added.

The loss of work is hitting Americans along with an assortment of troubles -- gasoline prices in excess of $4 a gallon, over all inflation of about 5 percent, and declining wages.

"In every dimension, people are worse off than they were," said Mr. Roubini, the New York University economist.

Are Consumers Done?

That is a major worry.

The fate of the economy now rests on the shoulders of the American consumer, whose spending amounts to 70 percent of all economic activity.

When people go to the mall and buy televisions and eat out, their money circulates through the economy. When they tighten their belts, austerity ripples out and chokes growth.

Through the years of the housing boom, many Americans came to treat their homes like automated teller machines that never required a deposit. They harvested cash through sales, second mortgages and home equity lines of credit -- an artery of finance that reached $840 billion a year from 2004 to 2006, according to work by the economists James Kennedy and Alan Greenspan, the former Federal Reserve chairman. That allowed Americans to live far in excess of what they brought home from work.

But by the first three months of this year, that flow had constricted to an annual rate of about $200 billion.

Average household debt has swelled to 120 percent of annual income, up from 60 percent in 1984, according to the Federal Reserve.

And now the banks are turning off the credit taps.

"Credit is going to remain tight for a time potentially measured in years," said Mr. Tilton, the Goldman Sachs economist.

This is the landscape that has so many economists convinced that consumer spending must dip, putting the squeeze on the economy for several years.

"The question is, will it get as bad as the 1970s?" asked Mr. Rogoff, recalling an era of spiking gas prices and double-digit inflation.

Long term, Americans may have no choice but to spend less, save more and reduce debts -- in short, to live within their means.

"We're getting a lot of the adjustment and it hurts," said Kristin Forbes, a former member of the Council of Economic Advisers under President George W. Bush, and now a scholar at M.I.T.'s Sloan School of Management. "But it's an adjustment we're going to have to make."

Who's to Blame?

There is plenty to go around.

In the estimation of many economists, it starts with the Federal Reserve. The central bank lowered interest rates following the calamitous end of the technology bubble in 2000, lowered them more after the terrorist attacks of Sept. 11, 2001, and then kept them low, even as speculators began to trade homes like dot-com stocks.

Meanwhile, the Fed sat back and watched as Wall Street's financial wizards engineered diabolically complicated investments linked to mortgages, generating huge amounts of speculative capital that turned real estate into a conflagration.

"At the end of this movie, it's clear that the Fed will have to care about excesses," Mr. Barbera said.

Prices multiplied as many homeowners took on more property than they could afford, lured by low introductory interest rates that eventually reset higher, sending many people into foreclosure.

Mortgage brokers netted commissions as they lent almost indiscriminately, offering exotically lenient terms -- no money down, no income or job required. Wall Street banks earned billions selling risky mortgage-linked securities around the world, aided by ratings agencies that branded them solid.

Through it all, a lot of ordinary Americans borrowed a lot more money then they could afford to pay back, running up enormous credit card bills and borrowing against the value of their homes. Now comes the day of reckoning.

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

Now, the above article comes from the New York Times, the official source of information and disinformation of the Democrat Party.

So, I don't want to hear a lot of Dems says that this is a bad news source...

Anyway, what the article is missing is the next question...

The next question is:

Which President and which party is most likely to act in a way that will help the economy and lessen the depth of the Depression and lessen the length of the Depression and find ways out of the coming (and present) Depression??

Now, the reason (in my entirely biased opinion) that the next question is not part of the NYT's article is because the clear answer is that the Dem party is the worst possible party to be in charge in a Depression.

What do you suppose will happen if Obama really does increase the tax rate significantly on the wealthy (which to you who can think means the part of the US economy that hires people and creates things and provides services and supports the masses with the quality of life that Americans enjoy)?

1)more job layoffs. Increasing/raising unemployment rate
2)less investment in solutions for fuel and other economy problems because the Fed Government took the funds that might be invested in solutions.
3)continued high fuel costs.
4)run away inflation combined with the Fed Reserve raising interest rates to try to stop inflation. Less money to loan. Tighter credit provision.
5)further crashes in the value of your home.
6)dramatic increases in the expenditures of the Fed Government for social programs to take care of the growing number of unemployed and the growing number of people employed with jobs that pay too less to keep up inflation.

In short, the Dem party will worsen the coming (and already present) depression.

Now, I think that it is quite possible that Obama will have another "Eureka" moment and suddenly announce that all his previous economy/healthcare/etc. rhetoric has to be thrown away due to the "Facts on the Ground" of the failing US economy. So, it is possible that the Dems will all become Republicans as to their approach on the economy. I sure hope so because Obama is probably going to win...

Your view?

My recommendations:
1)buy a bicycle
2)get out of debt
3)pay off your credit cards and get rid of them (or at least stop using them to live beyond your means).
4)start hoarding food now before the prices climb more
5)move to a house/rental/etc. that you can really afford and make other moves in your budget to get way below your salary. Create a surplus in your own budget.

Or you can ignore me and hope I am wrong...

[alexamenos]

Originally Posted by wmbwinn

My recommendations:
1)buy a bicycle
2)get out of debt
3)pay off your credit cards and get rid of them (or at least stop using them to live beyond your means).
4)start hoarding food now before the prices climb more
5)move to a house/rental/etc. that you can really afford and make other moves in your budget to get way below your salary. Create a surplus in your own budget.

Or you can ignore me and hope I am wrong...

sage advice -- I'm about to downsize on homes for the 2nd time in the last 5 years, and I'm working towards freeing up (ie, saving) nearly 50% of my take-home pay. I think that sort of cushion is necessary to ensure an adequate cushion for the ramifications of some sort of stagflation.

[alexamenos]

and on one further note, go here to hear George W. Bush...

http://www.youtube.com/watch?v=eXj4-PFuMLc

...provide a succinct explanation of the present and coming economic perils, to wit:

"Wall Street got drunk!"

this is George W., faux conservative and unrepentant big goverment leftist, who faithfully believes that the malaise in the economy is unrelated to the inflationary, budget busting, economically intrusive and micro-managing ways of the largest government institution in the history of mankind, but instead it's the fault of a few businessmen for creating and marketing a handful of inconsequential financial instruments which he doesn't understand.

wmbwinn asks which party and president are best suited (or least worst-suited) to steer through the coming times....

...imho, both parties and presidential candidates are left-wing keynesians deep down in their pathetically dark little economic souls, and neither has a clue.

[92bDad]

Part of me thinks it would be better to let the Dems take power and ruin America...then perhaps people would wake up and vote these Dems out of office for good???

My fear is that once they are in power, they will create laws to restrict the free speech of conservatives and essentially set up rules that will keep the Dems from ever losing power.

The Dems are manipulative and power hungry, with no realization of the reality that they influence in a negative way.

I fear for my kids, my grandkids and any generations that this world continues to exist after them...

[Arne]

Originally Posted by 92bDad

Part of me thinks it would be better to let the Dems take power and ruin America...then perhaps people would wake up and vote these Dems out of office for good???

My fear is that once they are in power, they will create laws to restrict the free speech of conservatives and essentially set up rules that will keep the Dems from ever losing power.

The Dems are manipulative and power hungry, with no realization of the reality that they influence in a negative way.

I fear for my kids, my grandkids and any generations that this world continues to exist after them...

Hmm... Is that your best attempt at a rational post on politics?

It sure feels like every month we move closer to the election the IQ of most of this board drops another ten points. I haven't seen a good rational post on politics for ages in here. Every crappy little post is filled with some Republi/crat propaganda.

Every people gets the politicians it deserves, I guess...

[jefelump]

Originally Posted by Arne

Hmm... Is that your best attempt at a rational post on politics?

It sure feels like every month we move closer to the election the IQ of most of this board drops another ten points. I haven't seen a good rational post on politics for ages in here. Every crappy little post is filled with some Republi/crat propaganda.

Every people gets the politicians it deserves, I guess...

And yet I don't see you posting your thoughts on the topic... just criticizing the posts of others. If you want something more rational, then please enlighten us with your thoughts. We're waiting.

[jefelump]

Originally Posted by 92bDad

Part of me thinks it would be better to let the Dems take power and ruin America...then perhaps people would wake up and vote these Dems out of office for good???

I heard that same thought put this way the other day... "Shall we climb Barack Back Mountain to send a message to the Republicans?"

It is something I have considered for a while, but in the end have come to the conclusion that I just can't do it. I'll be voting for McCain, not because I like or support him, but because I think he's better than Obama.

[Robillion]

The reason why those that do not agree with 99% of those that post in this forum do not post much or try to argue any type of point really (besides Janett Reno) is because we look at what all of you neocons are actually saying and say... wow, I do not even want to waste my time typing out a response. These people will not listen to one word, and rid themselves of one shred of partisanship.

When I read 92bDad's post I couldn't help but to start laughing out loud. Seriously... the "Dems" did not put us in this position. I cannot understand the mindset of anyone that can twist all of our problems this country has had over the past 8 years as being the "Dems" fault. HA.. wow. .. and even funnier. Bush is a leftist??? hahaha. Wow.

The only explanation I can come up with for why most of you think the way you do is that you were raised to think that way and will not look at things objectively with your own eyes...

It is futile for anyone with any sense to post in this forum...sometimes I, along with about a handful of others here just have to say something in response, but it will always go to deaf ears.

[wmbwinn]

Arne and Robillion have followed the strategy page of Mr. Obama perfectly:

1)identify a problem
2)attack the problem
3)blame the problem on someone else
4)offer no solution

It is really annoying to read these posts. At least give it a try. I don't think either of you can put forth a sound arguement to support Obama and the Dem party in this economy. Consider that a dare if you will.

And, Alexamenos: Agreed that both parties will fail.

Glad you are taking care of your own finances. Arne won't have to worry about it until the crashing American economy also sinks the German economy. Robillion will be first in line asking the government for a handout.

[jefelump]

Originally Posted by Robillion

The reason why those that do not agree with 99% of those that post in this forum do not post much or try to argue any type of point really (besides Janett Reno) is because we look at what all of you neocons are actually saying and say... wow, I do not even want to waste my time typing out a response. These people will not listen to one word, and rid themselves of one shred of partisanship.

When I read 92bDad's post I couldn't help but to start laughing out loud. Seriously... the "Dems" did not put us in this position. I cannot understand the mindset of anyone that can twist all of our problems this country has had over the past 8 years as being the "Dems" fault. HA.. wow. .. and even funnier. Bush is a leftist??? hahaha. Wow.

The only explanation I can come up with for why most of you think the way you do is that you were raised to think that way and will not look at things objectively with your own eyes...

It is futile for anyone with any sense to post in this forum...sometimes I, along with about a handful of others here just have to say something in response, but it will always go to deaf ears.

Do you realize how snobbish and elitist you sound? What you're basically saying is those that disagree with you and your "handful of others" are mindless drones, and that we're too "partisan" to listen to your common sense and logic. Oh, and to a liberal, the word "non-partisan" means that conservatives compromis on their beliefs and standards and "fall in line" with the liberals. Case in point.... When the Education bill was passed in the first part of GW's presidency, Bush was applauded for being non-partisan. Ted Kennedy wrote that bill, and GW just signed it.

And no, I was not "raised to think the way I do". Politics were rarely discussed in my household. Heck, my own father hasn't voted in over 20 years, because he doesn't see the point in it. My viewpoints and opinions are my own, and not the "brainwashing" of my parents.

[wmbwinn]

Only the sound of crickets...

My incredibly smart and elite Liberal friends won't condescend from Mount Olympus to discuss the issues with me?

[GermanDunk]

Trouble in sight.

After years of consolidation, german "IFO"-Index ( economic outlook ) drops very, very significantly for the 2nd month in a row.

[alexamenos]

Originally Posted by Robillion

... and even funnier. Bush is a leftist??? hahaha. Wow.

Yes, Bush is certainly a leftist, or to be a bit more precise he plainly accepts many Keynesian and collectivist assumptions. This is obvious if you look at what he actually does, and if you listen to what he actually says, and if you've paid any attention to anything other than the cowboy boot wearing propaganda of the last 8 years.

[GermanDunk]

Now GfK ( consumer index ) slides down to a 5 year low. Welcome to the depression.

[Arne]

Well, when in the world did I say that I support Barack Obama, or even more ridiculous that I support his economic policies? I'm not a Democrat supporter. I never ever go for a party I go for ideas. Truth of the matter is that both Barack Obama and John McCain lack understanding of economics. I truly dislike both of them.

If the German economy will sink with the American one than sure not, because Germans are unable to consume the goods they produce (we export the most in the world) themselves. It will be because of our world wide fiat monetary system.

If you want ideas then read the ideas of the candidate I actually agree with (Ron Paul) and not the candidate you try to paint me as a supporter of (Obama):

http://www.ontheissues.org/2008/Ron_..._+_Economy.htm

You might also want to read hist book. A book about the issues, not him as a person.

http://www.amazon.com/Pillars-Prospe.../dp/1933550244

[Rhylan]

Originally Posted by alexamenos

Yes, Bush is certainly a leftist, or to be a bit more precise he plainly accepts many Keynesian and collectivist assumptions. This is obvious if you look at what he actually does, and if you listen to what he actually says, and if you've paid any attention to anything other than the cowboy boot wearing propaganda of the last 8 years.

Word up, he certainly is. Problem right now is, the idea of left & right got redefined in moral terms during the 1960s... and government has grown unchecked ever since.

It's really too bad that we had such awful equality issues w/ race and gender to work through in the 20th century.. if not for those, the modern left wouldn't have anything to really talk about. And maybe we'd actually be debating things in terms of the Constitution and ability of the federal government to effectively do or not do certain things, rather than framing everything in terms of equality, sunshine, & rainbows.

[rabbitproof]

Alex, Rhylan--

I'm curious, what did Bush do to make you think he is a leftist? I think I hear what you're saying but would like some more info..

[alexamenos]

rabbitproof --

To give one very concrete example, it's GWB's unbridaled zeal for a world-wide democratic revolution....you know, liberation by imperialism. It's practically Jacobin, which is to say it's a quintessentially left-wing.

Here's a quote straight from the desk of George W. Bushnik in the National Security Strategy:

Helping the world’s poor is a strategic priority and a moral imperative. Economic development, responsible governance, and individual liberty are intimately connected....The United States must promote development programs that achieve measurable results – rewarding reforms, encouraging transparency, and improving people’s lives.

US Federal Government programs to bring economic prosperity and liberty to 6 billion people scattered across the globe are not on the agenda's of limited-government types who think the job of president is to execute laws passed by Congress. This is grossly ambitious stuff that makes the Soviet Comitern look like a bunch of slovenly monarchs.

[Usually Lurkin]

I think it's safe to say that GWBush is very conservative on many social issues and on tax issues, very right on issues of military strength, and very liberal and very left on the size and role of government. That's the essence of 'compassionate conservatism.' Too bad for him that acting like a liberal didn't win any friends from the voting left. Ultimately, his identity is on the right, and the politics on the left are about identity above all else.

[Arne]

Something Big is Going On

The following statement is written by Congressman Paul about the pending financial disaster. He will introduce this statement as a special order and insert it into the Congressional Record next week. Fortunately, we have the opportunity to debut it first on the Campaign for Liberty blog. It reads as follows:

I have, for the past 35 years, expressed my grave concern for the future of America. The course we have taken over the past century has threatened our liberties, security and prosperity. In spite of these long-held concerns, I have days—growing more frequent all the time—when I’m convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed.

Though the world has long suffered from the senselessness of wars that should have been avoided, my greatest fear is that the course on which we find ourselves will bring even greater conflict and economic suffering to the innocent people of the world—unless we quickly change our ways.

America, with her traditions of free markets and property rights, led the way toward great wealth and progress throughout the world as well as at home. Since we have lost our confidence in the principles of liberty, self reliance, hard work and frugality, and instead took on empire building, financed through inflation and debt, all this has changed. This is indeed frightening and an historic event.

The problem we face is not new in history. Authoritarianism has been around a long time. For centuries, inflation and debt have been used by tyrants to hold power, promote aggression, and provide “bread and circuses” for the people. The notion that a country can afford “guns and butter” with no significant penalty existed even before the 1960s when it became a popular slogan. It was then, though, we were told the Vietnam War and a massive expansion of the welfare state were not problems. The seventies proved that assumption wrong.

Today things are different from even ancient times or the 1970s. There is something to the argument that we are now a global economy. The world has more people and is more integrated due to modern technology, communications, and travel. If modern technology had been used to promote the ideas of liberty, free markets, sound money and trade, it would have ushered in a new golden age—a globalism we could accept.

Instead, the wealth and freedom we now enjoy are shrinking and rest upon a fragile philosophic infrastructure. It is not unlike the levies and bridges in our own country that our system of war and welfare has caused us to ignore.

I’m fearful that my concerns have been legitimate and may even be worse than I first thought. They are now at our doorstep. Time is short for making a course correction before this grand experiment in liberty goes into deep hibernation.

There are reasons to believe this coming crisis is different and bigger than the world has ever experienced. Instead of using globalism in a positive fashion, it’s been used to globalize all of the mistakes of the politicians, bureaucrats and central bankers.

Being an unchallenged sole superpower was never accepted by us with a sense of humility and respect. Our arrogance and aggressiveness have been used to promote a world empire backed by the most powerful army of history. This type of globalist intervention creates problems for all citizens of the world and fails to contribute to the well-being of the world’s populations. Just think how our personal liberties have been trashed here at home in the last decade.

The financial crisis, still in its early stages, is apparent to everyone: gasoline prices over $4 a gallon; skyrocketing education and medical-care costs; the collapse of the housing bubble; the bursting of the NASDAQ bubble; stockmarkets plunging; unemployment rising;, massive underemployment; excessive government debt; and unmanageable personal debt. Little doubt exists as to whether we’ll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression?

There are various reasons that the world economy has been globalized and the problems we face are worldwide. We cannot understand what we’re facing without understanding fiat money and the long-developing dollar bubble.

There were several stages. From the inception of the Federal Reserve System in 1913 to 1933, the Central Bank established itself as the official dollar manager. By 1933, Americans could no longer own gold, thus removing restraint on the Federal Reserve to inflate for war and welfare.

By 1945, further restraints were removed by creating the Bretton-Woods Monetary System making the dollar the reserve currency of the world. This system lasted up until 1971. During the period between 1945 and 1971, some restraints on the Fed remained in place. Foreigners, but not Americans, could convert dollars to gold at $35 an ounce. Due to the excessive dollars being created, that system came to an end in 1971.

It’s the post Bretton-Woods system that was responsible for globalizing inflation and markets and for generating a gigantic worldwide dollar bubble. That bubble is now bursting, and we’re seeing what it’s like to suffer the consequences of the many previous economic errors.

Ironically in these past 35 years, we have benefited from this very flawed system. Because the world accepted dollars as if they were gold, we only had to counterfeit more dollars, spend them overseas (indirectly encouraging our jobs to go overseas as well) and enjoy unearned prosperity. Those who took our dollars and gave us goods and services were only too anxious to loan those dollars back to us. This allowed us to export our inflation and delay the consequences we now are starting to see.

But it was never destined to last, and now we have to pay the piper. Our huge foreign debt must be paid or liquidated. Our entitlements are coming due just as the world has become more reluctant to hold dollars. The consequence of that decision is price inflation in this country—and that’s what we are witnessing today. Already price inflation overseas is even higher than here at home as a consequence of foreign central bank’s willingness to monetize our debt.

Printing dollars over long periods of time may not immediately push prices up–yet in time it always does. Now we’re seeing catch-up for past inflating of the monetary supply. As bad as it is today with $4 a gallon gasoline, this is just the beginning. It’s a gross distraction to hound away at “drill, drill, drill” as a solution to the dollar crisis and high gasoline prices. Its okay to let the market increase supplies and drill, but that issue is a gross distraction from the sins of deficits and Federal Reserve monetary shenanigans.

This bubble is different and bigger for another reason. The central banks of the world secretly collude to centrally plan the world economy. I’m convinced that agreements among central banks to “monetize” U.S. debt these past 15 years have existed, although secretly and out of the reach of any oversight of anyone—especially the U.S. Congress that doesn’t care, or just flat doesn’t understand. As this “gift” to us comes to an end, our problems worsen. The central banks and the various governments are very powerful, but eventually the markets overwhelm when the people who get stuck holding the bag (of bad dollars) catch on and spend the dollars into the economy with emotional zeal, thus igniting inflationary fever.

This time—since there are so many dollars and so many countries involved—the Fed has been able to “paper” over every approaching crisis for the past 15 years, especially with Alan Greenspan as Chairman of the Federal Reserve Board, which has allowed the bubble to become history’s greatest.

The mistakes made with excessive credit at artificially low rates are huge, and the market is demanding a correction. This involves excessive debt, misdirected investments, over-investments, and all the other problems caused by the government when spending the money they should never have had. Foreign militarism, welfare handouts and $80 trillion entitlement promises are all coming to an end. We don’t have the money or the wealth-creating capacity to catch up and care for all the needs that now exist because we rejected the market economy, sound money, self reliance and the principles of liberty.

Since the correction of all this misallocation of resources is necessary and must come, one can look for some good that may come as this “Big Even” unfolds.

There are two choices that people can make. The one choice that is unavailable to us is to limp along with the status quo and prop up the system with more debt, inflation and lies. That won’t happen.

One of the two choices, and the one chosen so often by government in the past is that of rejecting the principles of liberty and resorting to even bigger and more authoritarian government. Some argue that giving dictatorial powers to the President, just as we have allowed him to run the American empire, is what we should do. That’s the great danger, and in this post-911 atmosphere, too many Americans are seeking safety over freedom. We have already lost too many of our personal liberties already. Real fear of economic collapse could prompt central planners to act to such a degree that the New Deal of the 30’s might look like Jefferson’s Declaration of Independence.

The more the government is allowed to do in taking over and running the economy, the deeper the depression gets and the longer it lasts. That was the story of the 30ss and the early 40s, and the same mistakes are likely to be made again if we do not wake up.

But the good news is that it need not be so bad if we do the right thing. I saw “Something Big” happening in the past 18 months on the campaign trail. I was encouraged that we are capable of waking up and doing the right thing. I have literally met thousands of high school and college kids who are quite willing to accept the challenge and responsibility of a free society and reject the cradle-to-grave welfare that is promised them by so many do-good politicians.

If more hear the message of liberty, more will join in this effort. The failure of our foreign policy, welfare system, and monetary policies and virtually all government solutions are so readily apparent, it doesn’t take that much convincing. But the positive message of how freedom works and why it’s possible is what is urgently needed.

One of the best parts of accepting self reliance in a free society is that true personal satisfaction with one’s own life can be achieved. This doesn’t happen when the government assumes the role of guardian, parent or provider, because it eliminates a sense of pride. But the real problem is the government can’t provide the safety and economic security that it claims. The so-called good that government claims it can deliver is always achieved at the expense of someone else’s freedom. It’s a failed system and the young people know it.

Restoring a free society doesn’t eliminate the need to get our house in order and to pay for the extravagant spending. But the pain would not be long-lasting if we did the right things, and best of all the empire would have to end for financial reasons. Our wars would stop, the attack on civil liberties would cease, and prosperity would return. The choices are clear: it shouldn’t be difficult, but the big event now unfolding gives us a great opportunity to reverse the tide and resume the truly great American Revolution started in 1776. Opportunity knocks in spite of the urgency and the dangers we face.

Let’s make “Something Big is Happening” be the discovery that freedom works and is popular and the big economic and political event we’re witnessing is a blessing in disguise.

[alexamenos]

Originally Posted by Usually Lurkin

I think it's safe to say that GWBush is very conservative on many social issues and on tax issues, very right on issues of military strength...

And this sort of thing is where I think the debate has been framed in such a way that "right" and "left" are defined in terms of "right of way the hell to the left" and "left of way the hell to the left".

on taxes, I very distinctly remember hearing Comrade Bush say that the top income tax rate should be "no greater than 33%, on principle!!!", with the clear implication (and by his subsequent actions) that up to 33% is well within his principle--comfort zone. It's an odd principle, 33%....Jehovah never demanded more than 10%, and I'm just not sure how one arrives at such a principle, but at any rate the debate over tax rates is framed between those who think it ought to be 33% and those who think it ought to be 40 or 50 or whatever....

(10%, anyone.....2%....0%)

at most, Bush is a "supply-sider", and the debate between supply-siders on one side and the whatever-ists on the other side of the aisle is a debate over what top marginal tax rate maximizes revenue to the federal government. (ba dum bum)

on military strength....Nikita Kruschev and Leonid Brezhnev were big on military strength, as have been virtually all socialist dictators, as were quintessentially liberal US presidents Wilson, FDR, and LBJ. So Bush's answer to how much should we spend is "more, more, more" on most government programs, and the military isn't any different.

and social issues....sure, that's where the cowboy boot wearing propaganda comes in.

anyhoo.....the terms "left" and "right" can only describe so much, but I think the most basic fact is that the US Federal Government was the largest government institution in the history of mankindwhen George W. Bush took over -- after eight years of Bush it is much bigger. Any analysis or critique of Bush and Co has to begin by recognizing this fact, left, right or whatever.

[Usually Lurkin]

Originally Posted by alexamenos

the debate between supply-siders on one side and the whatever-ists on the other side of the aisle is a debate over what top marginal tax rate maximizes revenue to the federal government. (ba dum bum)

on military strength....Nikita Kruschev and Leonid Brezhnev were big on military strength,

well, 'left' and 'right' are relative terms. Just because GWB's views are left of you doesn't mean that they are not right of most of us, or right of his perceived peerset.

after eight years of Bush it is much bigger. Any analysis or critique of Bush and Co has to begin by recognizing this fact, left, right or whatever.

why there? Why not the war we're in, or the hundreds of thousands of unborn babies that are killed every year, or economic recovery after 9/11?

[alexamenos]

Just because GWB's views are left of you doesn't mean that they are not right of most of us, or right of his perceived peerset.

the thing is, my views and GWB's views (and Hillary Clinton's, and Nikita Kruchev's) aren't different by matters of degrees, but they are qualitatively different things.

For instance, I think the top marginal income tax rate ought to be 0%, and the reason I think this is because it's morally wrong (imho) to hold a gun to someone's head and force them to choose between imprisonment or shelling out a portion of their labor [working being a thing a person must do in order to survive, hence the options are a) die, b) go to prison; or c) shell out cash for the privilege of living and working]...

So, the difference between my view on 0% and GWB's view on 33% isn't simply that he's on one side of 16.5% and I'm on the other, but rather the differences are moral and categorical. So in this regard, George W. Bush has a great deal in common with Nikita Kruschev and Hillary Clinton, and absolutely nothing in common with me. left, right or whatever we want to call it.

Why not the war we're in, or the hundreds of thousands of unborn babies that are killed every year, or economic recovery after 9/11?

the war we're in? is that the war in Iraq, the one we've been in since 1990 or so??? or the other one where we're waging a world wide global anti-jihad against the forces of evil to spread democracy and liberty to 6 billion lost souls? either is a case where Bush has taken the largest government institution in the history of humanity and expanded it, so I see these things as pieces of data that fit into a larger thesis.

I think i've been sufficiently dismissive of Bush's cowboy boot wearing propaganda, and i don't know what more to make of the fact that hundreds of thousands of unborn babies were killed every year while Bush was president.

and "economic recovery after 9-11" What Bush-nik centrally managed government programs do you credit for the "economic recovery after 9-11"?

[Flacolaco]

and "economic recovery after 9-11" What Bush-nik centrally managed government programs do you credit for the "economic recovery after 9-11"?

The simple act of not taxing the crap out of everyone like Obama is about to do?

[alexamenos]

Originally Posted by Flacolaco

The simple act of not taxing the crap out of everyone like Obama is about to do?

I've been getting the crap taxed out of me since 9-11.

[Flacolaco]

Originally Posted by alexamenos

I've been getting the crap taxed out of me since 9-11.

Congratulations on making a lot more money than I do.

(I was just trying to poke you with a sharp stick anyway )

[alexamenos]

It's not that I make any money but rather that I have a low threshold for taking crap, or having crap taken from me, or something.

(I was just trying to poke you with a sharp stick anyway )

that's what she said.

and then I found out she had a stick, so I don't like to talk about it.

[Usually Lurkin]

Originally Posted by alexamenos

For instance, I think the top marginal income tax rate ought to be 0%,

well, if your idea were actually viable (that is, if a significant portion of our fellow voters did not think that was kooky), and if Bush actually lined up to work against you, then I'd say Bush was on the left on this issue. As it is, the dividing line is somewhere between Bush and, say, Obama, and Bush is on the right, and Obama is on the left, and you are on the lunatic fringe of absolutism. You are only slightly closer to reality than say a 100% tax rate freak would be. I happen to agree in fantasy land with your absolutism more than with the 100%-er, but it is still a useless fantasy.

I think i've been sufficiently dismissive of Bush's cowboy boot wearing propaganda, and i don't know what more to make of the fact that hundreds of thousands of unborn babies were killed every year while Bush was president.

as with the war, you define your priorities. You minimize the war and abortions by saying that they existed before GWB and continue through his presidency, but maximize government growth because it started before GWB and continued through his presidency. If taking money from your neighbor under the definition of taxation is the single greatest evil that you think the president could work against, then you really are on the fringe of things. You are the fringe that I could work with, but you are still the fringe. As such, you'd have to say that probably 99.9% of the US is on the left. Which makes for a really bad definition of 'left'.

And if you dismiss the cowboy hat propaganda, you dismiss the biggest reason Bush is not a leftist. He speaks Spanish with a Texas accent and is labeled a dumb yokel proclaiming everything great about America. Obama is monolingual and cosmopolitan while lecturing us on multilingualism and the evils of America. One is on the right and one is on the left just for reasons of identity.

and "economic recovery after 9-11" What Bush-nik centrally managed government programs do you credit for the "economic recovery after 9-11"?

It's all those government work programs that I imagine Kerry and Gore and Clinton being unable to push through.

[Flacolaco]

I have a low threshold for taking crap, or having crap taken from me, or something.

Now there's something we can all agree on.

Except for people who may vote a certain way this November. Apparently they're looking forward to it.

[Underdog]

Originally Posted by Flacolaco

Now there's something we can all agree on.

Except for people who may vote a certain way this November. Apparently they're looking forward to it.

Whatever, we're getting crapped on no matter which guy we vote for - the only option we're getting is whether we want corn or peanuts in our crap...

[alexamenos]

ul -- you earlier presented political differences as if they are matters of degree, but this is incorrect. There are categorical political differences, and I'm attempting to make a point that the differences between George W. Bush and _____________ (insert a fine example of a left-wingish, big government liberal here) are marginal and relative, not categorical.

Moreover, the present state and size of our Federal Government today would have been considered a massive, socialist behometh by on-lookers as recently as 70 or 80 years ago in our country's history -- really, really LEFT, that is -- and today George W. Bush is very much a piece of that LEFT, socialist behometh. It is in this sense that I say Comrade Bush is a leftwinger (ie, descriptive first and foremost, and by happy coincidence a little perjorative too).

as for the fantastically silly idea of 0 income taxes, you do realize that during much of our country's history we have had no income tax, don't you? So my idea, however fantastically silly it may be, is neither unprecedented nor impractical. (that said, it is very bad for the Federal Government, but if the question here is how do we maximize the liberty of the people, then we really shouldn't concern ourselves with whether the Federal Government has ample slop in its trough)

That said, it is common when moral arguments are made against systemic abuses for some to say "but it's impractical to end the abuse"... But it's not at all impractical if our goal is to expand free and civil society and diminish institutionalized violence. In fact, not only is it practical but also necessary.

Cheers

[Usually Lurkin]

Originally Posted by alexamenos

ul -- you earlier presented political differences as if they are matters of degree, but this is incorrect. There are categorical political differences, and I'm attempting to make a point that the differences between George W. Bush and _____________ (insert a fine example of a left-wingish, big government liberal here) are marginal and relative, not categorical.

draw your category where you want, but the difference between 0 and 1 is the same as between 35 and 36, and is the same as between 99 and 100.

Moreover, the present state and size of our Federal Government today would have been considered a massive, socialist behometh by on-lookers as recently as 70 or 80 years ago . . . . . . as for the fantastically silly idea of 0 income taxes, you do realize that during much of our country's history we have had no income tax, don't you?

you do realize that that is a long time ago, don't you?

So your absolutist definition is relative to history? 70-80 years from now you will call Bush and Gore and Clinton radical right-wingers?

That said, it is common when moral arguments are made against s

the simple fact is that you are among a very, very small minority that think that a 1% income tax would be a gross moral injustace. Most of us think it's bad at most, but not as great as other issues to fight. And most of us think that labels 'left' and 'right' cover more than whatever issue we do think is the most important issue to fight.

[rabbitproof]

Originally Posted by Underdog

Whatever, we're getting crapped on no matter which guy we vote for - the only option we're getting is whether we want corn or peanuts in our crap...

Ah, the truth can be so funny..

[sike]

what a freakin great thread....

[chumdawg]

Originally Posted by alexamenos

It's not that I make any money but rather that I have a low threshold for taking crap, or having crap taken from me, or something.

You sure don't mind taking all sorts of stuff for free, though, do you?

[alexamenos]

draw your category where you want, but the difference between 0 and 1 is the same as between 35 and 36, and is the same as between 99 and 100.

no it's not the same. it's not the same in exactly the same way not-raping a fourteen year old girl and only raping her a little bit are two very different things.

[alexamenos]

Originally Posted by chumdawg

You sure don't mind taking all sorts of stuff for free, though, do you?

no, I love "free" things.

[alexamenos]

birds of a feather....

recalling --

this is George W., faux conservative and unrepentant big goverment leftist, who faithfully believes that the malaise in the economy is unrelated to the inflationary, budget busting, economically intrusive and micro-managing ways of the largest government institution in the history of mankind, but instead it's the fault of a few businessmen for creating and marketing a handful of inconsequential financial instruments which he doesn't understand.

read now the words of Robert Mugabe, a man who makes George W. Bush look like a fiscal conservative, as he blames "entreprenuers" for the demise of the economy in Zimbabwe, rather than his abject corruption and hyper-inflationary ways.

One third of Zimbabweans have become economic and political refugees. Another third is dependent on foreign food aid. But Mugabe barred non-governmental organizations from handing out food last month, claiming they were supporting the opposition.

On Wednesday, central bank governor Gideon Gono announced he was dropping 10 zeros from the currency, effective Friday. That comes a week after he introduced a 100 billion-dollar note which was not enough to buy a loaf of bread.

Mugabe went on television immediately after Gono's announcement to warn against illegal money dealings and profiteering.

"Entrepreneurs across the board: Don't drive us further," he warned. "If you drive us even more we will impose emergency measures."

I'm not saying our own little banana republican is as bad as Mugabe, but just that they're cut from the same cloth.

[Underdog]

Originally Posted by alexamenos

no it's not the same. it's not the same in exactly the same way not-raping a fourteen year old girl and only raping her a little bit are two very different things.

Dark...


I was going to say that there's a bigger difference between 0 genital warts and 1 genital wart than 35 or 36, but you decided to take it to the extreme...

[chumdawg]

So, it's binary, then? We need to be sure we have our definitions down, if we are going to argue these points.