Tuesday, June 28, 2011

We just need more trust fund babies, that would fix everything

The Greek Parliament is waffling on approving the looting of their country demanded by the IMF in return for a temporary bailout. It’s billed as a once and for all fix to their problems but if they approve it they can kiss their economy goodbye. The average Greek seems to get it as rioting has increased with a general strike underway. The Greeks would lose their electric grid, water works, gas companies, railways, airports, sea ports, post offices, telecom company, defense factories, public land and buildings, stadiums, tourist attractions, important landmarks and the sight of the Olympics. (and Mount Olympus if the bankers can find it)

The EU is saying take it or leave it but Greece would be far better off dumping the Euro and negotiating a pay down of their debt in new Drachmas. Creditors would be happy to get anything and putting their own money in circulation would guarantee a market for Greek products as buying stuff would be the only way creditors could get paid.

That being said this would not be without risk for the Greeks, the IMF would be likely to seek retribution after being snubbed. You need to understand that we are in the middle of WWIII and for the most part the modern despot seeking world domination doesn’t wear camouflage but a $3000 suit. Of course if you happen to be sitting on resources they want and they can’t make you bankrupt then you could get a visit from the guys who still use bullets.

So the Greeks can keep their country and pull themselves up by their bootstraps or they can give it away for vague promises of prosperity someday. There are many here that are ready to give our country away just the same way and I’ve been getting their comments on my blog. The right has an entire fantasy world laid out with its own history and system of economics. It’s poor people’s fault that they borrow so much money, the right can’t grasp the fact that the corporate overlords are running a company store right out of The Grapes of Wrath.

Under supply side economics like we’ve had the last 30 years the only way to sell enough goods is to loan money to the under paid workers or the goods simply pile up. Ben Bernanke says he can’t understand why the economy doesn’t recover. Well Ben, it’s not that complicated, consumer credit has been curbed as their equity is largely tapped out and wages are falling. You have to do one thing or the other, pay people enough so they can buy the Model T’s or you need to loan them money so they can shop at the company store.

Loaning money creates a nice big bubble but bubbles always burst, this works great for the rich though who make money on the way up and steal assets on the way down. Paying decent wages so that the productivity gains in an economy are distributed to the people who are productive gives you endless opportunity for growth and prosperity. The rich don’t do so well under a merit system as only the really creative ones do well, the trust fund babies not so much and have to get real jobs.

But an awful lot of Americans think they will be trust fund babies someday if they side with the rich. They don’t have any plan for this (maybe buying lottery tickets) but they are sure it will happen just the same. So they are okay with making other people poor and the poor can starve but this will make them better off (they‘ve read the talking points and can be heard on the radio if they can‘t read). Selling off  public assets is fine with them as they think this will cut taxes. It won’t of course as the government will pay to rent them back for twice the cost and other public resources will simply be lost forever. But don’t worry, we can all be trust fund babies.  www.prairie2.com


Anonymous said...

Wow, did I really inspire an entire post? Awesome!

Once again, I find myself nodding along right up until you go and get all PC populist.

In your favorite example of the Greeks you prove my point nicely.

You say they would be better off dumping the Euro and going it alone...and I couldn't agree more.

My entire point and beef was with this notion that the debt crisis is "phony" and that all we have to do is force the evil corporate overlords to pay better and everything will be peachy. I think that is as one sided and short sighted as the right wing talking points you enjoy heartily scoffing at.

Lets take Greece for example, you suggest that they need to simply cut the cord with the creditor who seems determined to squeeze every last dollar out of them for little more than a promise that they will be around to do it again the next time trouble comes along. In making that argument and stating it's consequences, whether you know it or not, you acknowledge the fact that the debt crisis is as real as anything else, as real as money itself.

Furthermore you go on to state that by bootstrapping itself up and dealing with it's creditors directly they will ultimately be better off, which is basically exactly the opposite of what you are arguing is the solution for solving the problem of American consumer debt and economic disparity when you say that people just need to be paid more and things will work out.

I'm saying that you need both, austerity from the debtors with the courage to stand up and say enough, and a recognition that the creditors have been taking advantage of the people and gaming the system for far too long.

Mobis21 said...

What has become apparent about the so-called budget deficit crisis is that much of it is contrived political floatsam engineered by Republicans for the benefit of their teabagging audience.

In the right's fantasy world, deficits didn't matter during Reagan's reign who ran them continuously throughout his entire two terms and ditto for Bush II, who so willfully took us down that same briar patch.

Their incessant clarion call to impose throat tightening "fiscal responsibility" and "austerity" measures around the necks of the American people to address their artfully ginned up "financial 911" in the face of obscene corporate profits by their Wallstreet Overlords, who currently pay very little in the way of taxes, is chutzpah meeting hubris without not so much as the courtesy of a reach around.

What I am left wondering though is will Obama blink or find the cojones to stand up to these political, corporate thugs?

prairie2 said...

Nodding right along until the facts contradict a cherished belief. Go learn some basic economics, supply and demand for example. Demand comes from wages or debt. Demand has to equal supply or your economy shrinks. Supply without demand = economic collapse.

BTW except for "Wait,Wait... " I don't listen to NPR, I listen to actual liberal radio, try it you might learn something.

A Troll is somebody who only posts talking points, wrapping them in attempts at sounding rational doesn't change the fact that you only have talking points and the same standard insults all righties use.

I not going to waste time explaining the same things over and over again. If anybody else wants to post a reply, feel free.

Anonymous said...

I have a question for the troll. Why wasn't this debt an issue before 1981? I find it hard to believe that Americans one day woke up in 1981 and said "Let's spend more than we make."

Anonymous said...

"same standard insults", "basic economics", Troll=Someone who only posts talking points...

That is a whole lot of hypocricy and hubris right there, I'm suprised you were able to cram it all in to so few words.

Fine, don't respond to the points I'm making, just take the Fox News (read: coward) out by categorizing everybody who dares dissagree with you as a missinformed troll and talking down your nose about how I need to learn "real economics" while you repeat the same things I just said in different words.

For the Anonymous poster from the "Troll"...

It absolutely was a problem before 1981, but never more so than in the 1920's and 30's.

While opinions on the causes and factors of the great depression are as varied and passionately debated as any, two of the almost universally agreed upon causes of the economic collapse that predceeded the great depression are the loose credit policies that resulted in both people and institutions being overleveraged (also called a "Bubble") and income desparity. If you follow the money it is very clear the former is directly driving the latter.

Also, to more directly answer your question, don't forget that the great depression caused an entire generation of Americans to distrust the financial industry. The result of that was that through the 50's and much of the 60's the economy was actually under-leveraged and people were accumulating what prarie2 refers to as "real wealth" at record rates. As the Baby Boomers rose to maturity and power they brought a fundamental change in the way they viewed the financial markets, one that was manifest in supply side economics and the deconstructing of almost every protection put in place by the previous generation.

So while it wasn't like they just woke up one day and said "Let's spend more than we make." There was a fundamental change in the mentality and perception of money by the nation as a whole that is basicly equivalent to that statement, and it started long before 1981.

prairie2 said...

I'm sorry but there is no moral equivalence. If you would stick to questions about economics you would get a better reception but you would still be wrong. It isn't hubris when one uses actual facts and history to inform their opinions. Talking points are talking points and I've heard them all. Read past posts and you can find most of the answers you claim to want. Act civil or I won't post your comments anymore but I will still refer to your talking points as what they are.

Anonymous said...

That's a shame, truly. I was refered here from another board by a person of simlar mind to yourself who had posted a link to your article. He gave me pretty much exactly the same response you have.

It is hubris when someone arrogantly proclaims that they have "heard all of the right wing talking points" and have no time discuss this one after he shills little but the same old progressive talking points, when he decries "the same old insults" as he uses terms like "troll" to degrade the people he talking to, and when looks down his nose and suggests basic ecnomics lessons after making blatantly false economic claims like "you can't create money from nothing"....

I've been back through your archives for the past few months, there is little of actual supporting facts or historical examples, and much of repeated talking point and anecdotal commentary.

Color me dissapointed.

Thanks for your time, I guess...

prairie2 said...

You read through my archives already? you have way too much free time. I'm not here to educate you on economic theory, there are books on the subject. if you stick with Chicago School they'll tell you exactly what you want to hear, but their ideas have been dismal failures for everybody but the rich. If you have a net worth of more than 10 million you probably don't want to hear me. I am curious though,are you a paid poster? If so how much do you get?

Anonymous said...

You are a paranoid parrot aren't you?

I said I had gone back a couple months, but I didn't look at the dates and I underestimated your prolificity, so it was more like a month, and as I have said before, I agree with a lot of what you say, when YOU talk economics I find it very interesting and for the most part well presented.

Which is why I find it so dissapointing that you treat my position that debt is a (sorry, THE) huge problem and is as real as anything with such contempt. So much so that you basicaly ignore everything else I say.

You're so attatched to this populist dogma talking point that the problem of debt is made up by corporate overlords to take over the world that the fact that we probably agree on 90% of this stuff doesn't matter. I'm a non-believer, and I must be shunned.

My point was and still is one of economics, yet for some reason you keep saying that isn't what I'm talking about? The causes and effects of credit and debt isn't economics?

I mean, I thought my first post on this article was quite reasonable and on point.

If I missrepresented your position on Greece, please, tell me.

If you have a valid reason for proscribing one ideological solution for the the situation in Greece, and a completely sepearate one for the people of America, I'd love to hear it.

I mean that is why I came here in the first place, so I could present my argument and see if could present some information that would change my mind.

Because I've heard your talking points before too, and like I said, I follow the argument right up until this idological leap is made that says, "in order to fix this problem, we just have to fix the middle class by taxing the rich, providing more services, and paying better wages".

If credit is loosened, history has repeatedly shown that all that really leads to is abuse and income disparity, yet that seems to be what Mr. Reich is sugesting is part of the solution in his video. If people get better wages, they are still going to be paying the uber rich double digit interest rates on the nearly $10000 they have (on average) borrowed on top of their outrageous mortgage, and with looser credit they will likely just borrow more, in effect giving back thier wage gains to the uber rich who weren't supposed to have them in the first place.

It simply doesn't make any sense to me, and I'm asking you to make sense of it. Why, how, is this not a problem? How will Keynsian Economics fix this problem?

Those are honest questoins, but you don't believe that do you? To you I'm just another right-winger here to trap you and make you look foolish.

prairie2 said...

These might be honest questions but you didn't listen to the answers before so I think you are just filibustering. My position on Greece is no different than for the US. When you say Keynsian Economics, I have know idea what you think you know about it, there are a lot of myths around. I explained the problem with using consumer debt to replace wages, this isn't an opinion this is what happened. You mentioned the 20s and this was what they were doing then too. Credit doesn't exist because people want to borrow, it exists because somebody wants to make money on loans. If you would notice, the only state doing well is North Dakota and they have a State owned bank. We should have all government owned banks and credit unions, this would solve the banking problem once and for all. Same solution for the Federal Reserve that isn't Federal and has no reserves. Let's be clear, I'll answer questions but you don't know enough about this to change my mind on anything, so stop the long run on posts. (and don't call me arrogant because face it, you really don't know)

Mobis21 said...

Wow! so much to say and yet still hiding behind "Anonymous".

Anonymous, simple homework for you. Answer this question; what economic policies under the Clinton Admin created the Surplus and what were the inherent characteristics that created it?

Anonymous said...

You have no clue what I know and what I don't, other than what I have told you, which isn't much, so how about you drop the hoyty toity act professor. I'm well aware that my questions and arguments aren't going to be changing the hearts and minds of intellectual giants such as yourself.

Sorry for the long posts, and I appologize in advance for the length of this one, but I really am interested in this on a very personal level, so if you would prefer not to post it you can just post your response and omit or abridge mine.


I feel a little like this is a potato/potato argument. You say that people don't borrow money unless there is someone willing to lend to them, and I am saying someone is always willing to lend if people want to borrow.

But I think that all misses the point. Regardless of who is driving the bus and who is pushing it, the fact is that it's is unquestionably a negative factor that is hurting the middle class and benefiting the wealthy, and you acknowlege that it is in fact how the rich get richer and rob the poor in the process.

Yet nobody, including you, is talking about, how to fix that problem. All that is talked about is treating the symptoms. Taxing the wealthy, instituting social programs, raising wages...those are all just bandaids for the real problem of income inequality (I'm not talking about deficits here).

The reason that debt was created to replace wage increases was because wages were falling and credit was seen as a way to get the economy going in the absence of any real growth. 1980 is a politically convinient place to start a graph on fall wages, but the truth is that wages had been falling hard for nearly a decade before then and had been basicly flat since the 1960's.

This is why I am so interested by your Greek example, because I think you are absolutely right there, they should tell the IMF to shove it and deal with the reprecussions on their own, and you recognized that would be devastating to thier economy but ultimately better in the long run. But I don't see anybody saying that we should to that as individuals or a nation, why?

Is it not an invevitable consequence that if you take away form the wealthy the power to rob the poor by loaning them money, that the economy (which has been blown up and propped up by that credit) must contract or collapse?

I guess that is where you proposal for governemnt run banks comes in, but is it really wise or possible to take all of the money and put it in one often corrupt governemnt basket?

Regardless of that, the implication that ND is doing well because it has a state bank is quite a leap, I'd say that their blossoming oil indistry is probably a much more significant factor.

prairie2 said...

I just said I don't know what you think you know so I'm not going to answer questions based on defending broad concepts like Keynes.

Do a little homework and compare and contrast ND's oil economy with Texas. Texas is broke even with massive Federal bailouts and all their new jobs are minimum wage which really just creates a further drain on the state budget.

Actually I have a long list of "how to fix the economy" items, largely involve rolling back the last thirty years of decriminalization and I'm not going into it with you. Saying that nobody is offering any ideas is just a rightwing talking point. The Progressives in Congress have a plan that never gets mentioned in the corporate media. I'll give you that Obama doesn't talk about it, maybe he's a secret Republican or he knows it would be a waste of time in this climate.

Anonymous said...

The homework on ND is simple, their oil industry is new and their, the money is new, it hasn't been a part of their economy forever so until it reaches is peak steady state it is going to drive their economy up. Combine that with the fact that their economy is dominated by agriculture and crop prices have been steadily rising (not to mention the fact that you just compared one of the largest and most diverse state economies in the country with one of the smallest), and the homework on this would likely be easy for a sophomore level introductory course in economics. You have no evidence that a state bank had any impact on that states recovery other than the fact that it exists.

Ok, so your plan is mostly rolling back the last 30 years of decriminalization, you don't have to go into it, Glass-Steagall, DIDMCA, etc....

The clarion call from the economists you adhere to is
that credit needs to be loosened and wages increases so middle-class Americans can start spending us out of this recession. If we start rolling back those things it will have an immediate cooling effect on the economy, credit will tighten, companies will hoard even more money, and the economy will inevitably contract, making things worse for the middle class before they become better.

Is that something you are willing to accept, or do you think there is a way to avoid that?

prairie2 said...

I didn't say credit needs to be loosened, just regulate the parasites out of the system. Where is ND getting all that "new" money, they lend it to themselves. They create money the same way the Federal Reserve does it, just no rich bankers taking a slice or making policy to favor their cronies.

The "cooling effect" can be bypassed by not relying on Wall Street to run the economy. Money can be injected by making direct loans to business and by putting money into circulation by spending.

The Federal Reserve sets credit standards and determines how tight credit is by their lending, another reason to nationalize them and create 49 more state banks.

Anonymous said...

ND is lending new money to themselves? What? You don't borrow new money, and they're certainly not lending themselves record revenues. Beside the State Bank of ND has been almost completely nuetered just like the rest of the government financial agencies, they are little more than a public holding company now.

I'm not dissagreeing that a State run public bank is probably a good idea, it's got a lot of upside no doubt, but atributing North Dakota's quick rebound and current prosperity to it's use of a central bank is little more than political theater.

The fed TRIES to determine how tight credit is. The reality on the ground is that the banks still determine who gets money and who doesn't, that was plainly clear recently as the Fed loaned litterally trillions of dallars and lending still tightened up like a homophobe sphincter.

And as you pointed out with Greece, wresting the economy away form the power brokers on wall street is akin to a declaration of war, and would likely have the same cooling effect as regulating them out of buisness if not worse.

So when you say "direct loans", what are you talking about? Loans direct form the Fed? Direct from the state or federal government?

And what about consumer credit? that is a massive part of this equation, cutting it off would be devastating to the economy, and I don't think anybody thinks it's a good idea for the governemnt to get into the consumer credit game.

When you say "putting money into circulation through spending", you are talking about Keynsian economics, no? Keynes himself intended those types of measures to be a temporary band aid untill the private markets could recover and once again support the people.

I think the real danger with what you are talking about is that without some sort of radical reset in our economy it will litterally take decades for the private markets to catch up with the artificial bubble of prosperity we have created, especially if we cut the financial proffiteers who helped create it out of the equation. In the mean time we become vulnerable to the same kind of predatory actions that Greece is facing right now, and run the risk of destroying our currnecy and creating runaway inflation or deflation.

I just don't think there are any good options here, and I agree with your notion that we need to roll back the decriminalization, but not so much back as forward, using the same principles and applying them to the moddern economy. At the same time I think the notion that can be done without everybody feeling a healthy dose of austerity is a pipe dream.

Anonymous said...

The government cannot give to anybody anything that the government does not first take from somebody else.

prairie2 said...

Okay, let me understand this, the government shouldn't take a bucket of water from you and put out the fire in your neighbor's house? Just let the whole town burn.