Monday, March 17, 2008
Republicans benefit from the fact that recessions are class conscious, affecting worse those who can least afford them. An era of highly leveraged US economic expansion and empire is about to come crashing down and swept away. Count on the GOP to make out like bandits.
It seems like ages ago, the US was at peace, there was a budget surplus, the economy was growing, and the unemployment rate was very low. But not everyone was happy. There was an entire group of people who harbor not good, but ill will; an entire class wished for bad times and got it.
Until now, China had an interest in keeping the US ponzi scheme propped up –they sold billions to US citizens via Wal-Mart, the economic Kudzu that ate America. But since a Chinese sub popped up undetected in the middle of the US fifth fleet, it has been apparent that the honeymoon is over. China now leads the world in dumping dollars. Everywhere, it seems, it has become a habit. If this were mere recession staring back at us from a fun house mirror, it might be shrugged off. After all, the GOP has always loved recessions and benefited from them. A clue is found in the work of conservative Austrian-born economist Joseph Schumpeter who regaled his Harvard students in the mid-1930s with a pithy observation about how economic depressions actually benefit certain social and economic classes.
Chentleman, [sic ] you are vorried about the depression. You should not be. For capitalism, a depression is a good cold douche.
–Joseph Schumpeter, Economist, Harvard University Lecutre, circa 1930s
A pattern emerged with the ascension of Ronald Reagan: the rich keep getting richer and the poor keep getting poorer. Unfair tax cuts have a lot to do with that, but, also, the nature of recessions themselves. Everyone who is not an initiate into the cult of gopperism gets douched. The administrations of Reagan, Bush and Bush are like lab experiments that prove the hypothesis: GOP policies are designed to benefit an increatingly tiny elite or, as Bush called it, “my base.” This is no mere recession but complete collapse. Mephistophes has come knocking.
As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.Asian, Mid East and European investors stood aside at last week’s auction of 10-year US Treasury notes. “It was a disaster,” said Ray Attrill from 4castweb. “We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed.”The share of foreign buyers (“indirect bidders”) plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns.Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies.
Bush, meanwhile, seems unconcerned, perhaps, like Nero, fiddling as Rome burns. Then again, the GOP ‘class’ has always benefited from US recessions, depressions, and other economic catastrophes.
- Recessions, though not caused by declining stock markets, are always accompanied and often predicted by a plunging stock market. Republicans sell out at the peak, taking their profits. Enough selling will trigger the plunge; less knowledgeable investors begin to follow suit from fear but too late. Last man out loses.
- Having taken their profits on the upside, a depressed market is but an opportunity for the rich Republican to get back in at lower prices. Guess who sells at the lower price: the poor schmuck who is 180 degrees out of phase and can only dream of being a rich Republican. In reality, those he aspires to join are exploiting him.
- Very knowledgeable investors make money “selling short”, buying “put options”. These investors get peak prices for stocks even as the price declines. Illegal insider information is executed with “calls” and “puts.” The perpetrators of 911, for example, made millions, possibly billions, selling short the stocks of UA and AA. I defy anyone to come up with an ‘innocent’ explanation. The recipients of those profits had guilty foreknowledge of 911. The name ‘Buzz’ Krongard comes in connection with a known terrorist organization: the CIA.
Now –a planned financial meltdown might have presented the same opportunities. Historically, ‘elites’ have always emerged richer, stronger from recessions. On the other side of Ronald Reagan’s recession of some two years, the rich had gotten richer while the middle class was all but wiped out. The ill-effects of that recession are still seen in the decline of middle class neighborhoods, the permanent loss of manufacturing base and the jobs it created.The profits and volume were most certainly outside norms, proof that those executing the options had precise foreknowledge of the attacks. Those making those profits had “guilty knowledge” of the attacks; they were at the very heart of a murderous conspiracy.
- Unemployment always goes up in a recession. At the end of a longer recession, companies have the luxury of hiring from a larger labor pool at lower wages and/or salaries. Some companies –citing hard times –may reduce benefits, cut vacation or sick time. Big business must hate good times; it is only during times of full employment that workers have any leverage at all. Offhand I can think of only two times in history that have come close: the Clinton years, and, interestingly, Europe after the Black Death. The labor supply had been depleted by plague. Employers were often forced to accede to worker demands for better conditions, money, a place to live! Serfs had been freed and it marked the beginning of the end for Feudalism and set the stage for ‘corporate feudalism’, an age in which we still labor and suffer.
- Admittedly, many businesses go belly-up during recessions. While lip service is given to ‘free markets’ and Adam Smith’s ‘invisible hand’, die hard robber barons hate the ‘free market’. They prefer ‘monopoly’ when they can create one and ‘oligopoly’ when they can’t. Free competition among many sellers is the last thing they want. Recessions are welcomed. It’s the ‘cold douche’, a ruthless flush, so beloved by Schumpeter and the robber barons of American capitalism.
- Don’t expect recessions to bring down prices. More often, higher prices are the light that is seen at the end of the long, dark tunnel. In other words, those businesses fortunate enough to survive a ‘downturn’ are in the enviable position of raising prices on the other side. Higher prices benefit businesses that manage, even with government help, to stay in business during a recession. So much for laissez-faire capitalism. Those fortunate businesses now make more money per unit produced and will do so with fewer employees. The world is not so kind to everyone else, primarily smaller businesses and entrepreneurs, freelancers, and worker bees. Prices, we learned in Economics 101, are determined by supply and demand. If the demand is such that the market is quite willing to pay any price for it (prescription drugs, gasoline, certain rents) then demand is said to be inelastic.
- At the expense of over-simplifying, consumer demand is the arbiter of price only in markets characterized by diffuse competition. Recessions militate against a market of this sort, weeding out all but ‘privileged’ businesses, primarily those with juicy government contracts or GOP cronies in office. Only in the textbook model, is it assumed that the oligopolist’s market demand curve becomes less elastic at prices below a certain point. In markets characterized by the continuing decline in the number of ‘sellers’, it is obvious that there are fewer motivations for oligopolists to reduce prices. In such a market, the oligopolist (an aspiring monopolist) makes more money selling fewer units at higher prices than could be earned selling more units at lower prices. How many people are out of a job makes no difference to the American right wing for whom Scrooge is their abiding inspiration.
“Are there no workhouses? Are there no prisons…then let them die and decrease the surplus population.”—Scrooge
It is now time to address the concerns of Scrooge. The American right wing, consulted as they are by slick, suited Madison avenue whiz kids will never call the American gulag of FEMA camps by the names ‘work houses’ or ‘prisons’. By any name, they are presumably open and ready for those who fall through the gaping cracks. A perpetually depressed economy is a good source of slave labor. Who benefits? KBR? Halliburton?
Kellogg Brown & Root, a Halliburton subsidiary, is constructing a huge facility at an undisclosed location to hold tens of thousands of Bush’s “unlawful enemy combatants.” Americans are certain to be among them.The Military Commissions Act of 2006 governing the treatment of detainees is the culmination of relentless fear-mongering by the Bush administration since the September 11 terrorist attacks.Because the bill was adopted with lightning speed, barely anyone noticed that it empowers Bush to declare not just aliens, but also U.S. citizens, “unlawful enemy combatants.”Bush & Co. has portrayed the bill as a tough way to deal with aliens to protect us against terrorism. Frightened they might lose their majority in Congress in the November elections, the Republicans rammed the bill through Congress with little substantive debate.Anyone who donates money to a charity that turns up on Bush’s list of “terrorist” organizations, or who speaks out against the government’s policies could be declared an “unlawful enemy combatant” and imprisoned indefinitely. That includes American citizens.The bill also strips habeas corpus rights from detained aliens who have been declared enemy combatants. Congress has the constitutional power to suspend habeas corpus only in times of rebellion or invasion. The habeas-stripping provision in the new bill is unconstitutional and the Supreme Court will likely say so when the issue comes before it.Although more insidious, this law follows in the footsteps of other unnecessarily repressive legislation. In times of war and national crisis, the government has targeted immigrants and dissidents.
–-American Prison Camps Are on the Way, Marjorie Cohn, AlterNet.
There is more on the prospects of work camps, concentration camps, the illegal, unconstitutional war on dissent, and slave labor in America:
- Bear Stearns may be worse than LTCM collapse
- Jeff Randall: A world addicted to easy credit must go cold turkey
- How Bear Stearns ran out of the necessities
- Army Regulation 210-35 PDF format
- Bush Diplomacy: Predator Planes Are Conducting Assassinations by Air | ForeignPolicy | AlterNet
- Pacific News Service: 10 Year U.S. Plan for detention camps
- Bush’s Mysterious ‘New Programs’ (Alternet.org)
- REX 84 – FEMA’s Plan for Martial Law in America.
- KBR awarded Homeland Security Contract worth $385 Million.
- Sex Trade in Bosnia
- Ohio Patriot Act
- Ohio Patriot Act Legislature
- Oregon Life in Prison
- Camp Locations
- Life in Prison for Illegally Downloading Music?
- It’s not the first time a Bush has tried to overthrow the Government.
- Romney = Racist ?
- U.S. Taxpayers “Iced” (literally) for $36M
In Bush’s Orwellian dictatorship, a ‘terrorist’ is anyone Bush decrees a ‘terrorist’. As the article points out, US dissidents are always targeted by the right wing. The Bush regime –having set aside habeas corpus –has the right wing’s best chance ever of putting away the Bill of Rights for good. Bush has already done so on paper, by decree! “Stop throwing the Constitution up to me,” he is reported by two witnesses to have screamed! “It’s just a goddamned piece of paper!” Americans must dissent or risk being thrown into FEMA work camps forever. Bush believes that disagreement with him is ‘treasonous’. I deny his authority to define ‘treason’ upon his unlawful, unconstitutional decree. His proclamation is, therefore, null and void, still-born bullshit! Merely protesting Bush policy on this point, however, is proof enough of the dictatorial, unconstitutional and illegitimate nature of his regime. Bush, having made that principle the modus operandi by decree, is the real traitor to the very foundation of US law: the Constitution. In other words, Bush is guilty of high treason! As I have written numerous times, his war of naked aggression against Iraq, resulting as it has in the deaths of millions of civilians, is a capital crime under Geneva, to which the US is a party, affirmed by US Codes, Title 18, Section 2441, and, likewise, the Nuremberg Principles. Let’s get with the trial in which Bush is tried for capital crimes.
“During the late-nineteenth and early twentieth centuries in America, as labor unions organized and gathered power, as socialism grew in popularity among working and other oppressed peoples, industries owned by Rockefeller, Morgan, Harriman, Carnegie, and others, began hiring their own police forces and goon squads to infiltrate labor unions and spy on the political and personal activities of union organizers for the purpose of bringing arrests and convictions and eliminating all socialist activity in the nation. The most notorious example was the Homestead Strike of 1892, when Pinkerton agents killed several people while enforcing the strikebreaking measures of Henry Clay Frick, acting on behalf of Andrew Carnegie.”
–Carolyn Baker, PhD, US Government Targets American Dissent – Part I
It has been quipped: a conservative is never so miserable as when times are good. Certainly, miserable grinches –conservatives –got what they wished for. The surplus was pissed away in a series of Bush tax cuts benefiting only the very rich. Now, when the US faces the very real prospect of utter collapse, millions will be thrown out of work. What is to be said of an entire class of people who are happiest when others are miserable? I leave that to another article…
Another “benefit” of a recession is that it purges the excesses of the previous boom, leaving the economy in a healthier state. The Fed’s massive easing after the dotcom bubble burst delayed this cleansing process and simply replaced one bubble with another, leaving America’s imbalances (inadequate saving, excessive debt and a huge current-account deficit) in place. A recession now would reduce America’s trade gap as consumers would at last be forced to trim their spending. Delaying the correction of past excesses by pumping in more money and encouraging more borrowing is likely to make the eventual correction more painful. The policy dilemma facing the Fed may not be a choice of recession or no recession. It may be a choice between a mild recession now and a nastier one later.
But there is, after all, only one thing wrong with the economy: our government! If Republican partisans on the Supreme Court would see fit to allow one, a free and fair election may redress this grievance. If not, then the people will have no choice but to effect the remedies recommended by Thomas Jefferson in the Declaration of Independence, specifically that part about how the people may ‘abolish’ the government whenever it breaks its covenant.