The No-Think Nation
by Paul Craig Roberts
[Subscribe online to Chronicles: A Magazine of American Culture. Click here for details].
“The prospects of a government rescue for the foundering American automakers dwindled Thursday as Democratic congressional leaders conceded that they would face potentially insurmountable Republican opposition,” reported the New York Times last Friday.
Wow! The entire country is steamed up over the Republicans bailing out a bunch of financial crooks who have paid themselves fortunes in bonuses for destroying America’s pensions. Why do Democrats want to protect Republicans from further ignominy by not giving them the opportunity to vote down a bailout for workers? Quick, someone enroll the Democratic Party in Politics 101.
GM’s divisions in Canada and Germany are asking those governments for help. It will be something if Canada and Germany come through for the American automaker and the American government doesn’t.
Conservative talking heads are saying GM is a “failed business model” unworthy of a $25 billion bailout. These are the same talking heads who favored pouring $700 billion into a failed financial model.
The head of the FDIC is trying to get $25 billion—a measly 3.5 percent of the $700 billion for the banksters—with which to refinance the mortgages of 2 million of the banksters’ victims, and Secretary of the Treasury Paulson says no. Why aren’t the Democrats all over this, too?
Apparently, the Democrats still think they are the minority party or else their aim is to supplant the Republicans as the party of the rich.
Any bailout has its downsides. But if America loses its auto industry, it will lose the suppliers as well and will cease to have a manufacturing sector. For years no-think economists have been writing off America’s manufacturing jobs, while deluding themselves and the public with propaganda about a New Economy based on finance.
A country that doesn’t make anything doesn’t need a financial sector, as there is nothing to finance.
The financial crisis has had one good effect. It has cured Democratic economists like Robert Reich and Paul Krugman of their fear of budget deficits. During the Ronald Reagan years, these two economists saw doom in the “Reagan deficits” despite the fact that Organization for Economic Development and Cooperation data showed that the United States at that time had one of the lowest ratios of general government debt to gross domestic product in the industrialized world.
Today, Reich and Krugman are unfazed by their recommendations of budget deficits that are many multiples of Reagan’s. Moreover, neither economist has given the slightest thought as to how the massive budget deficit that they recommend can be financed.
Both recommend large public spending programs. Krugman puts a price tag of $600 billion on his program. If it takes $700 billion to save the banks and only $600 billion to save the economy, it sounds like a good deal. But this $600 billion is on top of the $700 billion for the banks, the $200 billion for Fannie Mae and Freddie Mac, and the $85 billion for AIG. These figures add to $1.58 trillion dollars, a sum that must be added to the budget deficit due to war and recession (or worse).
What we are talking about here is a minimum budget deficit of $2 trillion. The United States has never had to finance a deficit of this magnitude. Where is the money coming from?
The U.S. Treasury doesn’t have any money, and neither do Americans, who have lost up to half of their savings and retirement funds, and are up to their eyeballs in mortgage and consumer debt. And unemployment is rising.
There are only two sources of financing: foreign creditors and the printing press.
I doubt that foreigners have $2 trillion to lend to the United States. Thanks to the toxic U.S. financial instruments, they have their own bailouts to finance and economies to stimulate. Moreover, I doubt that foreigners think the United States can service a public debt that suddenly jumps by $2 trillion. At 5 percent interest, the additional debt would add $100 billion to the annual budget deficit. In order to pay interest to creditors, the United States would have to borrow more money from them.
Economists and policy-makers are not thinking. This enormous financing need comes not to a well-managed economy that can take the additional debt in its stride. Instead, it comes to an economy so badly managed that there are no reserves.
Massive U.S. trade deficits have been financed by giving up U.S. assets to foreigners, who now own the income flows, as well. Budget deficits from six years of pointless wars and from unsustainable levels of military spending have helped to flood the world with dollars and drive down the dollar’s exchange value. Consumers themselves are drowning in debt and can provide no lift to the economy. Millions of the best jobs have been moved offshore, and research, design and innovation have followed them. Considering America’s dependency on imports, part of any stimulus package that reaches the consumer will bleed off to foreign countries.
Generally, when countries acquire more debt than they can service, they inflate away the debt. If foreign creditors do not save the Obama administration, the Treasury will print bonds and give them to the Federal Reserve, which will issue money.
The inflation will be severe, particularly as Americans will not be able to pay for the imports of manufactured goods from abroad on which they have become dependent. The exchange value of the dollar will decline with the domestic inflation. Once inflation is off and running, the printing-press dollars will only have goods made in America to chase after. The real crisis has not yet begun.
Paulson should rethink the automakers’ and FDIC’s proposals. A bank produces nothing but paper. Automakers produce real things that can be sold. Occupied homes are worth more then empty ones.
Paulson’s inability to see this is the logical outcome of Wall Street thinking that highly values deals made over pieces of paper at the expense of the real economy.
COPYRIGHT 2008 CREATORS SYNDICATE INC.
[Subscribe online to Chronicles: A Magazine of American Culture. Click here for details].
1 Comment by Grumpy Old Man on 21 November 2008:
Good post, albeit sobering. But the Democrats are already a party of the rich. Obama’s money didn’t just come from $25 PayPal donations. Clinton had his Rubin, Bush his Paulson, both of Goldman Sachs.
2 Comment by Joseph Salemi on 21 November 2008:
I had a vision. It was of Osama Bin Laden in a mountainous retreat somewhere in Pakistan.
He was leisurely looking over a long checklist. And he was smiling as he slowly but steadily checked off one agenda item after another: “Involve them in unwinnable foreign wars,” “Drive them into unmanageable debt,” “Ruin what is left of their economy,” “Make their dollars worthless,” “Render their name and reputation mud in the eyes of the rest of the world” …and so on and so on.
Oh, wait a minute. Was it Osama Bin Laden? Or was it one of own home-grown neocons? I can’t quite remember.
3 Comment by Josh Cooney on 21 November 2008:
A country that doesn’t make anything! What? I dare you to find a country that produces more BigMacs, Whoppers and Happy Meals. I suggest we start stockpiling them, so when the Chinese come to take us over, we can have something to throw at ‘em.
4 Comment by stefanos skopros on 21 November 2008:
Joseph@2…yes,yes,…i too have been pondering how the weapons of mass destruction have been crafted not in caves in Afghanistan or souks in Damacus or houses in Hamburg but in our own, revered Wall St.
The terrorists who planned the devices that bring down our way of life were home-grown, not foreign. Homeland Security was looking in the wrong direction as it spun its terror alerts and prophecied “events.”
As usual, PCR is succinct and right on. His point that only the printing press or more foreign lending will bail US out should be taught to school kids.
5 Comment by george on 21 November 2008:
“A country that doesn’t make anything…….”
What are you talking about the US makes lots of things like war, record debt even independent countries like Kosovo out of other nations better than anyone else on the planet.
In the US your making babies and avoiding the population decline of countries like Russia although they are mostly American-Mexicans but Americans none the less so why should it matter.
6 Comment by Clyde Wilson on 21 November 2008:
As I think Dr. Roberts suggests, the problem is not one of economics—it is one of national character. The only positive indicator is that adversity might restore some character to the American upper and upper-middle class. Don’t hold your breath.
7 Comment by roho on 21 November 2008:
No doubt, our Industrial leaders of the past are Icons compared to these International Bankers, and Henry Ford was a true American.
This entire concept of Globalism and “The World is our backyard” is crap!………..And the U.S. Government has worked tirelessly to destroy America’s Manufacturing Base from LBJ’s “Great Society” to the idiots of Al Gore’s “The Sky is Falling” cult.
How do we compete against a nation of one billion industrialized citizens(China)with no polution standards, child labor laws, no OSHA, a growing currency that is devaluated, and a PR Campaign of trading with all “Without having to have a Naval Base first?
(And no history of demanding everyone become a democracy!)
What do we have that they need?………..Perhaps if we stop throwing money down a “Rat Hole” in Israel, and start thinking about “WHAT’S GOOD FOR AMERICA”, we can survive?
Hegemony is over, and the Brits need a different growling dog.(We have duplicated their stupidity.)
Great article by the way!
8 Comment by Etienne Gervaise on 21 November 2008:
A couple of years ago when the illegal immigration issue was bringing out the xenophobia in many Americans, some suggested — off the record — that since the government would no nothing about the problem, the only way to stop the river of mud was economic collapse. We might just have gotten our wish. Now we need to breed our own hewers of wood and drawers of water, and punish the swindlers to boot. It’s easier to do these things when the nation’s senses are not dulled by creature comforts such as fine wine and cable television.
9 Comment by Carey on 21 November 2008:
“A country that doesn’t make anything doesn’t need a financial sector, as there is nothing to finance.”
That statement leapt off the page. I have spent weeks waiting for someone from CNBC, or even the real world, to address that truth. Will this subject ever even come up in future deliberations?
As Mr. Wilson said, ” Don’t hold your breath.”
10 Comment by Allen Wilson on 21 November 2008:
Mr Gervaise is right, except on one point. I dont think most Americans know what fine wine is. If they do, as I believe Dr Fleming has suggested elsewhere, with many of them it’s just a status symbol rather than something to enjoy.
Other thoughts:
Even though we need to save them to avoid disaster, the big three are too big. We need more and smaller car companies that are more efficient. We need reciprocal, fair trade with foreign countries instead of either bogus ‘free trade’ or outright protectionism.
I think what we are witnessing here is the collapse of big systems. Big Corporatism seems to be on it’s way out, but not without causing a lot of hardship on it’s way. Big bloated institutions, whether corporate, banking, or government, are going to become a thing of the past. That is as it should be. We just need to get by in the meantime.
As for China, they are making many of the same mistakes we made decades ago, even up to the point of expensive manned space missions just so their astronauts can do a space walk and wave flags in front of cameras. How smart can they be if they will lend so much money to a profligate America they should have known could never pay up? They wont last as a world power, and in the end, China will turn it’s attention back in upon itself as it has always done.
11 Comment by george on 21 November 2008:
@7roho
Didn’t Henry Ford and the Ford motor company help industrialise the Soviet Union?
12 Comment by Kirt Higdon on 22 November 2008:
#9 – Although I am opposed to bailing out the auto giants as I was opposed to bailing out the banksters, I certainly hope and think you are right, Mr. Wilson, concerning the down-sizing to come. I think you are also right about the Chinese.
13 Comment by Leo on 22 November 2008:
Mr.Roberts feverishly stated just this summer that rising gas prices are a result of budget deficits. Unfortunately,reality intrudes and it is deflation that seems to be the worry.Roberts,who is a moralizer and not a serious economist belongs back on the Left’s funny pages not in Chronicles.Gas has gone down and…go figure…budget deficits have gone up.Roberts’ future projection of budget deficits in his above sermon dishonestly fails to discuss the historical recovery to the taxpayers in the previous bank and auto “bailouts”.But heck it’s much easier to use cute phrases like banksters than have one serious observation or proposal.Or try this one out folks:”a bank produces nothing but paper”.Sorry,Paul, not even Marx was that stupid.
14 Comment by Kirt Higdon on 22 November 2008:
#12 – “Deflation seems to be the worry”? To whom? Is anyone seriously worried about falling gas prices? To anyone who thinks beyond Paulson’s latest press conference, the real worry is the tidal wave of inflation coming down the road from this endless series of bailouts. They have to be financed from somewhere and raising taxes is not only political poison but would shut down an economy already in recession. So vast expansion of the money supply is the only answer. And yes banks do produce nothing but paper and electronic data entries. In a proper economy, they have a limited but significant service role. In the present day US, they are running the economy and running it into the ground for their own benefit, although the banksters will not be able to escape the reckoning to come anymore than anyone else will.
A few years ago, Chronicles commentator Dr. Srdja Trifkovic stated that he doubted the long term viability of a world economy where the US produces dollars and the rest of the world produces things that dollars can buy. He was right and so is Dr. Roberts.
15 Comment by Paul Craig Roberts on 22 November 2008:
Leo is guilty of ignorant rant. I made no connection between US
budget deficits and gasoline prices. I wrote that the sudden sharp rise in the price of oil was not due to supply and demand changes but to
a large increase in speculation in oil futures contracts. I wrote that speculators were flipping the contracts just as they had flipped contracts on waterfront condos.
Who is Leo to know who and who isn’t a “serious economist”?
Paul Craig Roberts
16 Comment by Etienne Gervaise on 22 November 2008:
@9 Mr Wilson
You’re right! I don’t know what fine wines are either. I drink Virginia wines since they’re the most local. Avoid the local Chardonnays, and stick the the pinot grigios and the viogniers. My local winery, Hartwood, makes an excellent table plonk claret called Rappahannock Red wich sells out in days, another week or so and I’ll get a case. Norton is the only truly native grape which produces a tough red with a leathery nose and may make hair sprout on your palms! But I like it anyway.
@10 George
If the FoMoCo’s demise means the end of their ghastly foundation, then good riddance to bad rubbish.
@13 Kirt
Is anyone seriously worried about falling gas prices?
Yes. The folks who create the news need to keep the sheeple in a constant state of fear. And the elite money-changers are only pre-programmed to profit from inflation.
17 Comment by Allen Wilson on 22 November 2008:
@14 Mr Gervaise
I didn’t mean to say that only expensive wines are ‘fine wines’. I have found cheap wines that are better than some really expensive wines. It’s nice to know that you have the same local outlook on wine that I have. I generally drink Arkansas wines like Post, Wiedekehr, and Mt Bethel, usually their Muskeydime (Muscadine) wines, which I would take over any grape wine any time. I’ll have to look into those Virginia wines, though.
18 Comment by robert m. peters on 22 November 2008:
For moral reasons – avoiding covetousness, envy, theft – and for constitutional reasons – enumerated powers only – realizing, of course, that the Constitution is actually no longer valid since it was ratified for the purposes of a union of constitutionally federated republics which no long exist, I oppose any and all bailouts, including the paper classes, the industrial classes and the pseudo-agrarian classes who continue to want their land banking and cheap federal insurance while pointing self-righteous fingers at the aforementioned and the welfare recipients. The latest addictions in these climes is the “business” of incarceration: federal facilities financed with fiat dollars to be paid by future generations (theft) are one of the economic and fiscal drugs of the day to which municipalities and country (parish) governments have become addicted. Here in Louisiana we are massively addicted to the presence of Fort Polk and Barksdale Air Force Base. Folks who would not give a welfare-mama a dime would run you through with the nearest knife if you advocated closing or curtailing one of their federal troughs. With more sober reflection, I might think otherwise; however, for the time being, I am in favor of the devil taking the hindmost! Of course, I may well be one of those who feel the hot breath and the prongs!
19 Comment by Leo on 22 November 2008:
Yes,Mr. Higdon ,deflation seems to be the worry…it is falling home prices and equity that started the current crisis!!P.C. Roberts has been more consistently wrong about inflation than the Jehovah’s Witnesses have been about the end of the world.I invite open-minded readers to search P.C. Roberts ‘work on the left-wing blog CounterPunch.This guy is an angry monotone and while I admire his early opposition to the Iraq debacle,I caution younger readers in particular to put emotion aside and look to the current”crisis” as full of opportunity not just danger.
20 Comment by Scott P. Richert on 22 November 2008:
Kirt Higdon (@14):
And yet, in the other thread, you seem surprisingly quick to accept as a good thing the loss not only of the auto industry but of manufacturing jobs in general. And surprisingly optimistic about the role that the service sector can play in sustaining the economy.
21 Comment by Lee on 22 November 2008:
Leo: “…it is falling home prices and equity that started the current crisis!” Wrong! Capitalism is the problem! {Please do not make the tiring mistake of awarding free market transactions, which have been around thousands of years before Capitalism, to Capitalism.) This crisis began in 1913 with the creation on the Federal Reserve, a private bank given the authority to print U.S. money at will, and was quickened when Nixon closed the gold window, releasing the last restraint on the Fed. The most recent catalyst for the current cataclysm was the failure of unqualified mortgage holders to pay the increased payments required of reset variable mortgages revealing, plainly, the supreme leverage that the bankers were running, all with “money” supplied by the Fed — not by depositors or by investors but by clueless taxpayers. The failure is due to Capitalism because it is the reigning system whereby the money class aggregates to itself all of the profits and relegates more and more and eventually all of the risk to citizens who increasingly have no assets to fall back on. The U. S. has become a colony of the class who controls the banks — note that when new money is created it is always given to the banks who cycle the money into the economy through debt. Debt creates slaves. It is not happenstance that the ancient Israelites were required to forgive all debts every 7 years. The de facto repudiation of this law is one of the reasons the Pharisees earned the epithets of “whitened sepulchers” and “pit of vipers”. Their modern disciples infest New York and Washington today.
22 Comment by Joseph Salemi on 22 November 2008:
Recently on TV, some policy wonk said the following: “Private virtue is public vice.”
He went on to explain that this meant that ecnomic behavior which was sensible and prudent for individuals (such as saving money, restricting major expenditures, and building up one’s personal resources for the future) was utterly destructive of the public weal, since if everyone were inclined to act in this way, our overheated, hyped-up, credit-happy economy would collapse.
I turned to my wife and said “Did I hear him right?” She replied, “Yes, unfortunately.”
I submit that when someone can make a public statement like that, it’s all over.
When saving money, acting prudently, and planning for the future are considered unpatriotic acts, then it’s time to realize that Edouard Drumont’s distinction between the “real nation” and the “legal nation” now applies to the United States with a vengeance. The legal nation (what Lee calls “the class who controls the banks”) is in no way connected to real Americans, except as bloodsucking parasites.
We don’t owe this swiving government anything. Let’s act in a manner that will bring about its destruction. Let’s save, let’s buy only good antique products at flea markets and curiosity shops, let’s not spend a dime on any well-advertised or media-hyped goods, let’s keep our sons out of the military and all our children out of the public schools.
Let’s be revolutionaries, in a very practical sense.
23 Comment by Grumpy Old Man on 22 November 2008:
#18 robert m. peters
An excellent point. It’s the other guy’s subsidy that most object to. If we have to subsidize, let it be the widow and the orphan. These, of course, have little voting power and less influence.
We are close to or past the point where everyone is taxed and debt is imposed on everyone’s children and grandchildren, in order to subsidize, well, just about everyone. When the pie is divided, however, as the old English song goes, it’s “the syme the ‘ole world over/ It’s the poor wot gets the blyme;/ While the rich ‘as all the pleasures . . .”
If we keep it up, and the slippered feet will tiptoe down the stairs as the hobnailed boots climb up.
Buy handbaskets and boots. Sell slippers short.
24 Comment by Kirt Higdon on 22 November 2008:
#20 – I have spoken against bailing out both the auto industry and before that the financial services industry. I oppose in general the looting of the prudent and responsible for the benefit of the greedy and the reckless. In the other thread, I spoke in favor of small scale local manufacturing (and gave at least one example of it) and against giantism. And certainly the role of the service industry is important. With respect to Dr. Trifkovic’s observation, our problem with China (to name the biggest but not only example) is not that we have bought their goods but that we have exchanged nothing of value, goods or services, for them. In effect, by buying our debt, both public and private, they have loaned us the money to buy their toys and gadgets. These debts can only be repaid by steadily inflating our money supply – what Dr. Trifkovic refers to as manufacturing dollars. Sooner or later, and at this point I think sooner, the Chinese will realized that they have been had and stop marketing to us and concentrate on their huge domestic market. There have already been riots in China, protesting the Chinese government’s subsidizing US consumerism at the expense of their own people.
#19 – OK, I guess that falling home prices are a worry to the banksters and the reckless and greedy real estate speculators they have enabled, but overall the fall of artificially inflated home prices is a good thing. It will put homes once again within the price range of people who are neither affluent nor reckless, but prudent and of modest means. What this country needs is deflation, but the Fed and the government are trying desperately to maintain the debt based economy by pouring more and more liquidity into the system through endless bailouts. It will take a year or two for the effect of this to be felt on the consumer level, but when it hits, it will be sudden and devastating.
#21 – Well put, although many would call our current economic system socialism or fascism, rather than capitalism.
#22 – What you heard has been rather common economic propaganda for some time. The purpose is to enslave people both by debt and by the vice of consumerism and sell this as patriotism. Your recommendations are excellent.
25 Comment by robert m. peters on 22 November 2008:
The debt-based economy is exactly what the Southern Agrarians understood as the great evil, whether is came primarily out of the private sector or in concert with the government, without which the debt-based economy could not exist in any magnitude. The Southern Agrarians demonstrate the evil of this seed in the seemingly innocent transaction of the subsistence farmer trading his mule for a tractor and incurring the costs, debt not only to money borrowed, but to fuel and parts, which unlike corn and breeding new stock, could not take place on the farm itself. The farmer becomes indebted to an outside set of forces which operate well beyond his commonwealths of family, Church and local community, and in becoming indebted to them, he betrays his way of life and the commonwealths in which he has thrived.
I struggle, likely in vain as measured by the world’s standards but hopefully not by God’s standards, to return to a “localized” productivity on the little farm with which Kind Providence has entrusted me. If nothing else, this entire mess has quicken me and prompted me to become a better steward with the little with which I have been entrusted: plant a fall and spring garden, ensure that I have some native-tough fruit trees growing, get by bee hives humming, and take care of myself so that I might be able to work what little I have. I am contemplating replacing the zero-turn mower for the eight acres which I mow with goats. I have a student who raises a kind of goat which produces milk and no little wool and eats, like most goats, lots of grass. In exchange for tutoring next year, she has promised to give me a pair. The dogs are going to have to start trailing rabbits and treeing squirrels lest they lose their status among the critters who have privilege here.
26 Comment by Leo on 22 November 2008:
Mr.Roberts why don’t you discuss your “opinions” regarding the events of September 11th,2001 so these readers can get a full taste of what a complete crackpot you are? You did state on the CounterPunch blog this summer your confident belief in the connection between rising gas prices and rising budget deficits.You did state above that “banks only produce paper”.I’m sorry you threw away a once respected career to become a public nut but there it is.If you currently run a business or make investments,lend some advice and at least give us a good excuse for the space you take up.It would be a good way to start your rehabilitation.
27 Comment by Leo on 23 November 2008:
I’ll go ahead and fill everyone in on P.C. Roberts and his real beliefs.P.C. has confidently stated that 9/11 was not a Muslim conspiracy but the yet undisclosed work of someone else.P.C. does not believe the airplanes brought down the towers…as to the Pentagon I’m not sure what he “thinks”.Typical leftist p.c.P.C. does not believe in a global struggle with Islam and has repeatedly stated that we have ginned up an imaginary Islamic Jihad.While I repeat my respect for P.C.’s anti-imperialist stands,it has and must remain the duty and mission of Chronicles to stand solidly for Christendom in this 1400 years war with Islam.I’ve even caught him making light of the Christian Armenian genocide.To summarize,he is not our ally or our friend;if his economic thought hadn’t descended into a useless monotone maybe he’d be worth reading.He’s not.P.C. can have the last word if he wants but readers are advised you should find the above still available on-line and subject to your search-engine.
28 Comment by Michael Ezzo on 23 November 2008:
Small is still beautiful. There is nothing silly about chopping wood for
burning a fire. I’ll bet rugged men like Wendell Berry, Roger Scruton, Chilton Williamson, and Robert M. Peters, do it all the time.
Etienne, it isn’t just Sony and Mikasa. 90% of all the
clothes, electronics, appliances, and furniture in my abode here in Japan are made in China.
You don’t have to agree with everything Paul Craig Roberts says, to realize that his view on many topics concurs with Chronicles, and that is why they feature his writings on those topics, as they would those of Bill Kauffman, Lewellyn Rockwell, or Justin Raimondo. Dr. Fleming has made this clear time and time again. So telling us that PCR is not on “our side” will do no good.
29 Comment by Frank on 23 November 2008:
Leo,
who is in “our” interests? Juan McCain? Jorge Bush?
—
Fighting Islam in the Middle East is a distraction, just as fighting the Cold War was.
The true war is going on right now within the borders of the US. And those who should be fighting are misdirected and distracted by propagandists like yourself into fighting pointless battles in the Middle East Cesspool, that is now and will likely be for thousands of years full of never ending violence and warfare.
When Buchanan made his Culture War speech, it was said by I think Kristol that the war had already been fought: and Buchanan’s side lost. Where was Buchanan’s side? It was fighting communism on the other side of the world.
30 Comment by Frank on 23 November 2008:
And the oh so simple solution to the Islamic problem within America is to simply deport them.
Leo might pretend to be morally outraged, but it’s more moral to deport them than to suffer thousands of years of warfare within the US.
And Leo, if I’ve misjudged you and you’re not a neocon, but rather a well meaning but confused American, then I apologise. However, your attack on PCR is, ah as Haggard put it: “walking on the fighting side of me”. If there are any Okies left, they need to stand and defend what’s left to defend.
And that stand isn’t to be made in Iraq or Israel, Syria, Iran, Afghanistan, Pakistan, etc. That stand is to made right here in the all but conquered and destroyed US. Let the Middle Easterners kill each other as they like; we have to save our own people.
31 Comment by J. Meng on 23 November 2008:
I am in positive agreement with the comments of Kirt Higdon, Lee, Joseph Salemi, and Robert M. Peters. I support Mr. Salemi’s suggestions in terms of being truly revolutionary: let’s save and spend wisely and bring down the Beast that oppresses us. I once had some land in Nevada, where I cultivated annual gardens, where I split wood for the woodstove which heated my dwelling, which warmed my chili beans and boiled my water. I had a few rich acres in Michigan, which had a well-established orchard of apple, pear, peach, and plum trees. I raised a few steers, pigs, lambs, chickens, and ducks for meat and eggs. Every year I cultivated a rather large garden. During those years I learned what it meant to be a tiller of the soil and a husbandman. It is the greatest occupation, in my opinion. Much work is involved, but the fruits (no pun intended) of labor are most rewarding. I believe if most Americans were small farmers or ranchers they would have a greater appreciation of and love for this nation, and we might not be in the present political and economic mess (and the battle for America as Frank puts it, would have been won by now). I get the impression that all those who live in the cities and the suburbs are basically rootless and flow with the latest Liberal trends (which are ever changing) and thus have become absolute speculators and consumers, because most do not produce real wealth. Living and working on the land, has kept me mindful of God and His wondrous works. As the Incarnate Word of God told us one time: we can do nothing without Him; and all blessings come from Him, and we owe Him thanksgiving and praise. So be it.
32 Comment by Etienne Gervaise on 23 November 2008:
@17 Mr Wilson
Virginia needs your tourist dollars. I recommend Old Town Alexandria over Washington DC. Second choice Old Town Fredericksburg, the site of the first urban warfare. Both places have shops selling VA wines, and I’ll be sure to pick up a few bottles of Arkansas wine. The tough southern grape does not bother me at all. I’ve acquired a fondness for magnolia, welder and muscadines.
33 Comment by H.F. Wolff on 23 November 2008:
Excellent advice above which may be summed as follows:
STOP FEEDING THE MACHINE!
Stop feeding the machine that would have us as slaves in our country.
This machine is fed through interest paid on money created “out of thin air”.
Therefore the admonition must be to live within our means and to not spend money you do not have to buy things you do not need to impress people you do not like.
For many of course it is impossible to forgo borrowed funds; these should be obtained from relatives, friends, local credit unions, or life insurance companies but NEVER FROM BANKS since this would feed the enslaving machinery.
When borrowing establish simple bi-annual interest and sign an IOU. And pay it off at the agreed time, the full amount, no argument.
And if individuals saving their hard earned after tax cash, “hurts” the nation or whoever, I say tough. Let whoever do without and get a productive job such as digging ditches or cleaning sewers.
Accumulated savings will tide one over the rough spots such as now or in the future.
H.F. Wolff
34 Comment by R. McCabe on 23 November 2008:
A main difference between Mr. Roberts and Leo is that Mr Roberts was able to write a past article that drew me into this Chronicles site, which I have since been following/reading/debating with and getting much sharper (and broader) from. Leo, alas, was unable to persuade me to go visit his site.
So I owe Mr. Roberts — thankfully not a serious economist — a hearty thanks.
35 Comment by dwright on 24 November 2008:
As this video demonstrates, just who benefits from bailing out the auto industry. How much of the industry is really benefiting americans ?
Of course, they should be ahead of line in front of Citibank, AIG etc. , but still.
http://info.detnews.com/video/index.cfm?id=1189
36 Comment by Red Phillips on 24 November 2008:
Leo, whatever the answer to the Islamic problem may be, it is most certainly not attacking Arab (or Persian) nation states in the Middle East.
What exactly are you proposing?
37 Comment by KMarx on 24 November 2008:
Leo,
You said: “Roberts feverishly stated just this summer that rising gas prices are a result of budget deficits.”
I’m not economist nor am I nearly as intelligent as the overwhelming number of people on this site but I must say I think you are incorrect on some issues. For example, I looked at the article on Counterpunch as you suggested and found this:
Paul Craig Roberts
June 11, 1008
“How to explain the oil price? Why is it so high? Are we running out? Are supplies disrupted, or is the high price a reflection of oil company greed or OPEC greed. Are Chavez and the Saudis conspiring against us? In my opinion, the two biggest factors in oil’s high price are the weakness in the US dollar’s exchange value and the liquidity that the Federal Reserve is pumping out.
The dollar is weak because of large trade and budget deficits, the closing of which is beyond American political will. As abuse wears out the US dollar’s reserve currency role, sellers demand more dollars as a hedge against its declining exchange value and ultimate loss of reserve currency status.”
I think the point Dr. Roberts was making is that the dollar is weak BECAUSE of large trade and budget deficits. (I did not see any cause and effect references to deficits and gas prices.) Of course, keeping in mind that I’m not an economist, I think this means that gas prices rose in part because as our dollar continues to lose value, foreign sources are concerned that the dollar will not be the reserve currency much longer. Hence they require even more dollars as a buffer to future declines in the dollar’s value. Leo, if have any comments on this I’m sure they would be welcomed.
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Leo, you said: “Roberts,who is a moralizer and not a serious economist belongs back on the Left’s funny pages not in Chronicles.”
Good heavens sir, the Left’s funny pages! Really now! In my day I’ve seen some really funny pages on the other side too. While I never considered this site a funny page I must admit I have read some really funny postings by a few on this site who really believe their ideas are worth serious consideration.
Did you know there are some on this site who attack or ignore me because of my moniker, (which I think is hillarious, that is, both the attacks and the ignoring!)? Lest they forget, actors often change their names, professional wrestlers adopt flamboyant monikers and even some of us are given nicknames when we were young, yet most intelligent people know and understand this and act like mature adults. Needless to say, the majority of posters seem to be decent.
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Leo, you said: “Sorry,Paul, not even Marx was that stupid.”
Sir, how dare you imply that Groucho Marx was stupid!
38 Comment by J. Meng on 24 November 2008:
@35, Dwright, thanks for the video clip. It was a revelation. I wonder what kind of tax breaks (and for how long) Ford received from Brazil for that new plant in Camacari? And, I gathered from the clip that Ford has assembly plants in Argentina and Mexico, too. Whatever sympathy I’ve had for the U.S. automakers, has been diminished. It seems to me that the lean plants Toyota, Nissan, and Honda have or are building in the United States are no different than what Ford and GM are doing overseas. Its just the transnational shuffle. Ford hires Brazilians; Toyota hires Americans. Here an increase, there a reduction. Is it possible that what we are seeing and experiencing is the result of finance-capitalism and that finance-capitalism is not concerned with the economic welfare of a nation?
39 Comment by Tom Piatak on 24 November 2008:
Mr. Meng,
The Japanese also have plants south of the border, and are likely to build more if the Big Three go under. As I noted in my original piece on this issue, “General Motors alone employs more Americans than all the foreign automakers put together, and Ford runs nearly as many assembly lines in the United States as do Toyota, Honda, Nissan, Hyundai, and VW put together. The Big Three buy 80% of the car parts manufactured in the United States, and their cars average 79% domestic content, compared to 35% domestic content for foreign cars sold here. And the Big Three employ the vast bulk of their engineers, designers, and managers in the United States, unlike their foreign competitors, which keep most such work in Japan or Germany, which is also where the profits they make from selling cars here wind up. In fact, the Big Three spend more each year in America on R & D than does the pharmaceutical industry, employing 65,000 skilled workers on research and development in Michigan alone.”
40 Comment by J. Meng on 24 November 2008:
Mr. Piatak,
Well, thanks for the info. Still, I have a question: why didn’t Ford build that lean, modern plant in Detroit or its environs or in any of our fifty states instead of in Camacari, Brazil?
41 Comment by Tom Piatak on 24 November 2008:
Mr. Meng,
I don’t know why Ford decided to build that plant in Brazil, but I suspect wanting to avoid the costs of manufacturing in the United States factored into the decision. By eliminating tariffs, while simultaneously imposing all manner of regulations, we have encouraged our businesses to operate this way. But the Big Three are still building new plants here: this fall, GM broke ground on a new engine plant in Flint, Michigan.
42 Comment by Joseph Salemi on 24 November 2008:
J. Meng @ 38
“Is it possible… that finance-capitalism is not concerned with the economic welfare of a nation?”
Possible? It’s a bloody certainty, as the Brits would say.
Finance-capitalism is also not concerned with a nation’s sovereignty, its cultural heritage, its customs and folkways, its religious beliefs, or the physical survival of a nation’s inhabitants (except insofar as this last item has a bearing on the availability of cheap labor). Finance-capitalism cares for nothing but immediate profit.
We are seeing today, in very stark detail, what Belloc talked about in 1900: namely, the utter immorality of big business, investment speculation, high financial shenanigans, and the insufferable propaganda for imperialism. (Back then they called it “enhancing the Imperial Enterprise” — today we call it speading Democracy and Humanitarianism and Liberal Values).
43 Comment by Etienne Gervaise on 24 November 2008:
@35 dwright
Fascinating! It should have more success than Henry’s rubber plantation catastrophe at Fordlandia.
44 Comment by thomas miller on 24 November 2008:
To the No Think fellow named Leo:
I have read all of Dr. Roberts’ articles at Counterpunch, and he has not written anything at all that could be considered “crackpot”. What he has said about Sept 11 is that the Bush Administration-appointed 9/11 commission did a horrendous job of investigating the events of that day, and as a result they have invited speculation in conspiracy theories. He has never personally endorsed these theories.
Man, for a forum that considers itself intellectual, you sure get a lot of people like Leo commenting here who are badly in need of a remedial reading comprehension course.
45 Comment by KMarx on 24 November 2008:
thomas miller,
“Man, for a forum that considers itself intellectual, you sure get a lot of people like Leo commenting here who are badly in need of a remedial reading comprehension course.”
You can say that again! Although I think remedial courses might be a bit too challenging for some of them.
46 Comment by Etienne Gervaise on 25 November 2008:
@ 40 J Meng
Because Brazil is not aborting massive numbers of its population, an economy can only grow realistically with its population. After all, we can only eat so much, store so many clothes and shoes, and park or drive so many cars. Becuase our families are smaller as we pursue material prosperity, the US population is graying and dying out. Blame Roe v Wade.
47 Comment by Etienne Gervaise on 25 November 2008:
@19 Leo
Falling home prices were not the only thing, for several years the shysters were saturating AM radio with ads for home equity loans, so foolish mortgage payers could self-indulge with expensive cruises and gambling junkets to Las Vegas. It seemed to me that a portion of the financial “industry” was concerned with turning the denizens of Suburbia into debt slaves. This is the kind of short-sightedness that precipitates finacial ruin on a personal level. When it happens a few million times it becomes a national disaster.
And your ad hominem attacks don’t lend you much credibilty. Knock it off!
48 Comment by Joseph Salemi on 25 November 2008:
Etienne Gervaise @ 47
Absolutely correct on those “home equity loans.” Encouraging them was a socially destructive as knowingly spreading venereal disease.
Only foolish people would use their homes as equity to borrow money for frivolous things like vacations or cruises. But many people are foolish, and it is at least some part of the responsibility of the rest of us, through law, to protect them from predators.
Capitalism doesn’t see it that way. For capitalists, “Caveat emptor” is the guiding principle, and they feel that it is an infringement of their rights if they are prevented from exploiting the foolishness of simple folk. Just ask any businessman or advertising agent. They see their fellow human beings as lawful prey.
This is why it is essential for us to begin to realize that capitalism, at least in the metastasized, malignant form that now afflicts us, is at the root of what is wrong with us. There are plenty of other things wrong as well, but let’s isolate this biopsy slide.
49 Comment by Rick JOhnson on 25 November 2008:
There is a distinction between Capitalism and Financialism. The former is a system based on investing the surplus of production over consumption, and is a positive sum process. The latter is a system based on manipulating and leveraging the surplus, and is a zero sum process.
Ever since 1913 and our Central Banking system, we have been sliding into Financialism. Recent activities suggest that the preferred future societal organization will be a Neo-feudalism.
50 Comment by Joseph Salemi on 25 November 2008:
Revilo P. Oliver used to say that the establishment of the Federal Reserve in 1913 was a colossal swindle, designed to enrich a small coterie of financiers.
Anyone want to comment?
51 Comment by Etienne Gervaise on 25 November 2008:
@48 Joseph
Capital is what is necessary to found a business enterprise. It is most often thought to be money, but it can also be personnel, goodwill, land etc. Marxists use the term “means of production,” which is a fair enough description. I started a business with a desk, a Ford Courier, $300 (which I used to buy a beeper, an answering machine, NCR forms and 1000 call cards.) I lived in a rented townhouse. I’m still in business, and have hired guys who lost their jobs, inspired a dozen people to become self-employed, and served my customers with aplomb.
Capitalism must be the worship of money, it seems to have very little to do with manufacturing, providing community stability, or even having long-term vision. But I do know that something is very wrong with the economy. With the large number of dying mill towns, and migration to Suburbia with it’s traffic congestion, and jobs being shipped elsewhere, we have a while to wait before things turn around. But there is hope. Americans are still hard-working even if they’re not the smartest folks in the world. Business need to get small, local, and creative again.
52 Comment by Joseph Salemi on 26 November 2008:
Yes, small business is fine. It is the perfectly natural expression of human ingenuity and acquisitiveness, and that sort of capitalism has been around since people climbed out of the trees and began to live in a society. God bless all small businessmen, and let them prosper.
It’s when things grow huge and monstrous and beyond any human scale that they turn evil. That is what has happened to us.
I recall reading an account of a stockholders’ meeting at some company. The company had grown by five percent in the previous year, with a corresponding increase in the dividends declared.
You think the stockholders were happy? Think again. They screamed “Why did we only grow FIVE percent? What’s wrong?”
In short, rather than being grateful for the honest return that their business had provided them, the stockholders were dissatisfied that the return wasn’t more. And I’m certain that if the increase had been ten percent, they would have still screamed out their dissatisfaction that it wasn’t twenty percent.
THAT’S the mentality that is destroying us. The psychopathic compulsion to expand a business beyond any reasonable limits in order to generate the highest level of profits is considered the proper way to go, and anyone who does otherwise is considered a fool.
53 Comment by Lee on 26 November 2008:
Caveat mutuator!
54 Comment by Constantine FitzRoy on 27 November 2008:
Leo,
Looking into 9/11 and asking basic questions about it does not make one a crackpot, quite the opposite.
55 Comment by J. Meng on 27 November 2008:
@27 Leo: I concur with Mr. Roberts and with Mr. Constantine (great name) FitzRoy apropos 9/11. I’ll go as far to say that the Twin Tower catastrophe has the earmarks of the Pearl Harbor attack in 1941.
56 Comment by Jack on 29 November 2008:
Will bailing out the big 3 suddenly increase peoples’ willingness to buy their cars? How and why? And if the bailout won’t increase market demand, the big 3 will burn through the money and be in the same situation in 2 years, so what’s the point?