This pretty much illustrates what is called a "last ditch" bonanza for Bush's buddies. The problem is that there are still ditches left and this so-called 700 billion dollar bailout is really going to amount to a trillion dollars.
I remember as far back as the 80s, about the time when the pronunciation seemed to become eeek o noniks, that arguments or what I considered discussions with people in the field almost always ended with them figuratively throwing their arms into the air and saying "You just don't understand eek o nomiks" and that was the end of the conversation. Well, that was about the time when Republican presidencies started to try to implement the theories of the "Chicago School," or Milton Friedman. A whole new way of approaching the field arose, all of it anti-Keynes (hence the last mailing).
It took on the name "Supply-Side". What it meant, of course, was that the government was on the side of the suppliers, the corporations, and a lot of de-regulation. It gained stature through many microeconomic mathematical models and the financial support of people who didn't want to be regulated and wanted to do away with all the things from the "New Deal" era, FDR, which actually saved capitalism. Marx actually had predicted that the revolution would come first in the US, and it almost did (Leninism quickly deteriorated into Stalinist and that was the end of Socialism). The New Deal prevented this revolution.
What did Mathematical Models have to do with this? Paradigm envy, as it has been called. I vividly remember, when studying Psychology, the articles in Journals, replete with statistics. Besides not knowing the difference between "Statistically Significant" and "Significant," their mathematics was deplorable. Sampling errors, invalid applications, you name it, just so long as there were equations there, it could get published. Sometimes, they would even give the figures and they would disprove the thesis they were purporting to support if only you knew something about the mathematics.
Now we are close to another New Deal. Certainly one is needed. What is needed is Demand Side economics.
So what is that?
Well, first of all, the automobile industry is falling into bankruptcy. Why? Because people can't afford to buy cars, that's why. They have been laid off, fired, sacked. See, when a Corporation announces a layoff, its stock price would rise -- the paper profit took precedence. Even such an ardent capitalist as Henry Ford, when shown robots to make cars so he didn't have to pay workers, said "Then who would buy my automobiles?"
Also, Corporations get tax incentives for paying workers in other countries so they can fire them in the U.S. Dick Cheney, at the start of this administration, said "the middle class is spoiled and we are going to fix that." Well, he did.
Now, giving this money to corporations is justified by reason of their being "too big to fail." Well, if they are too big to fail, they are too big to exist. Every institution must be forced to justify its existence anew.
The demand side clearly calls for giving this money to the people who would use it to buy things. Why was there such a mortgage problem? Because people couldn't pay their mortgages. Why? They had been laid off, lost their jobs, and the interest rates had doubled the monthly payments. That was a curious thing about the variable rate mortgage. It would be ok for the rate to be adjustable, if only the monthly payment remained constant. If the money were given to the people, they would be only to happy to stay in their new homes and pay their mortgages.
Every retailer, except WalMart, has had declining sales during the big spending season. Why? People don't have money to spend or they are worried that they won't soon.
Today, even corporations are in favor of single-payer health insurance as it would reduce their costs -- with the exception of the HMO industry. The government would be in a better position to negotiate medication and services costs with the suppliers and thus reduce the costs.
The cost of higher education goes up tremendously while in other Democracies the cost is almost nothing. In Iraq, before our invasion(s), education was free in return for government service at a reasonable salary. We took care of that in a real supply side way.
We need a guaranteed annual income, free health care, etc.
Here are two articles, one by Bernie Sanders and the other by Eric Toussaint:
The Road to Economic Recovery
November 10, 2008 By Bernie Sanders
Source: Huffington Post
Bernie Sanders's ZSpace Page
As the Bush administration sputters to an end, the official unemployment rate rose from 6.1 to 6.5 percent in October, and the number of unemployed persons increased by 603,000 to 10.1 million - for a total of 10.1 million unemployed - a 14 year high. In the last year alone of the Bush administration, unemployment has increased by 2.8 million, and the unemployment rate has risen by 1.7 percentage points. The news is deeply disheartening.
And these figures are conservative. They do not include workers who want a full-time job but are working part time or workers who have given up looking for work completely. The number of involuntary part-time workers rose by 645,000 last month, to 6.7 million. The figures do not include another half million workers so discouraged they have stopped looking for work. If we total these numbers, the unemployment and underemployment figures are very stark: almost 17 million Americans are jobless or unable to find the full-time employment they want.
These are very difficult times for Vermonters and Americans throughout this country. Consumer confidence is at an all-time low; while the foreclosure rate is at an all-time high. More than 100,000 Americans filed for bankruptcy just last month. Many of those fortunate enough to have a job are seeing their wages go down, while prices have been going up. Recent declines in the stock market are shattering the retirement dreams of many older Americans and forcing many more to delay their retirement plans for years to come (you can read testimonials here).
Since Bush has been president, nearly six million Americans have slipped out of the middle class and into poverty; over seven million Americans have lost their health insurance; more than 4 million Americans have lost their pensions, and median income for working-age Americans has gone down by over $2,000.
In these very difficult economic conditions, doing nothing is not an option.
When the Senate reconvenes on November 17th, I intend to fight for an economic recovery program that is significant enough in size and scope to respond to the major economic crisis this country now faces.
If we can commit more than $1 trillion to rescue bankers and insurance companies from their reckless and irresponsible behavior, we certainly should be investing in millions of good-paying jobs that rebuild our nation and improve its economy.
In my view, the size of this economic recovery plan should be, at a minimum, $300 billion.
This economic recovery package should first improve our crumbling infrastructure by improving our roads, bridges and public transportation. We need to bring our water and sewer systems into the 21st century. We need to make certain that high-quality Internet service is available in every community in America. Not only are these investments desperately needed, every billion dollars that we put into these initiatives will create up to 47,000 new jobs.
We also need to make a major financial commitment to energy efficiency and sustainable energy. With a major investment, we can stop importing foreign oil in 10 years, produce all of our electricity from sustainable energy within a decade, and substantially cut greenhouse gas emissions. We can also make the United States the world leader in the construction of solar, wind, bio-fuel and geothermal facilities for energy production, as well as create a significant number of jobs by making our homes, offices, schools and factories far more energy efficient.
In these harsh economic times, we should also make sure that, at the very least, all Americans have access to primary health care and dental care, which we can do by substantially increasing funding for the highly-effective community health center program. We should extend unemployment benefits, so that more than 1 million Americans do not run out of their benefits by the end of this year. We should assure that no one in America, in these hard times, goes hungry or homeless.
Finally, with towns and states like Vermont facing deep deficits, we must make a major, immediate financial commitment to states and municipalities. Their crisis will only grow worse as homes are foreclosed, as incomes decline, and as fees on sales of homes and motor vehicles diminish. For too long, unfunded federal mandates have drained the budgets of states and communities. The strength and vitality of our communities must be restored.
A Holy Union for a Deuce of a Swindle
November, 10 2008
By Eric Toussaint
Eric Toussaint's ZSpace Page
The bailing-out of private banks and insurances companies in September-October 2008 amounts to a strong political choice that was anything but unavoidable and that looms large on our future at several decisive levels.
First the cost of the bail-out is entirely supported by public instances, which will lead to a steep increase in the public debt. The current capitalist crisis, which will extend over several years, possibly ten, will result in a reduction of revenues for the governments while their liabilities will rise with the debt to be paid back. As a consequence, there will be strong pressures to reduce social expenditures.
North American and European governments replaced a rickety makeshift scaffolding of private debts with a crushing assembling of public debts. According to the Barclays' bank in 2009 the euro zone European governments should issue new public debt securities to an amount of EUR 925 billion. This is a staggering amount, which does not include new treasury bonds issued by the US, the UK, Japan, Canada, etc. Yet until recently these same governments agree that they had to reduce their public debts. Traditional parties all approved of this bailing-out policy that is intended to help large shareholders under the fallacious pretext that there was no other solution to protect people's savings and to restore confidence in the credit system.
Such holy union means transferring the bill to most of the population, who will have to pay for the capitalists' misbehaviour in several ways: less public services, fewer jobs, further decrease in purchasing power, higher contribution of patients to the cost of health care, of parents to the cost of their children's education, less public investment... and a rise of indirect taxes.
How are bail-out operations currently financed in North America and Europe? The State gives good money to the banks and insurance companies on the verge of bankruptcy, either as recapitalisation or through the purchase of their toxic assets. What do the bailed-out institutions do with this money? They mainly buy safe assets to replace the toxic ones in the balance sheets. And what are the safest assets on the current market? Public debt securities issued by the governments of industrialised countries (treasury bonds issued in the US, in Germany, in France, in Belgium, you name it).
This is called looping the loop. The States give out money to private financial institutions (Fortis, Dexia, ING, French, British, US banks,...). To support this move they issue treasury bonds to which these same banks and insurance companies subscribe, while remaining private (since the States did not demand that the capital they injected give them any right to make decisions or even to be included in the voting process) and deriving new profits from lending out the money they have just received from the States to these same States while of course demanding maximum return.
This huge swindle is carried out under the law of silence. Omerta rules among protagonists: political leaders, crooked bankers, rogue insurers. The major media will not provide a full analysis of how the bail-out operations are financed. They dwell on details - trees hiding the forest. For instance the big question raised in the Belgian press about financing the recapitalisation of Fortis, which is taken over by BNP Paribas, runs as follows: how much will a Fortis share be worth in 2012 when the State intends to sell those it bought? Nobody of course can give a serious answer to such a question but this does not prevent newspapers from devoting whole pages to it. This is called distraction: the philosophy and mechanism of the bail-out operation are not analysed. We must hope that through the combined effect of alternative media, citizens' organisations, trade union delegations, and political parties of the radical Left, a growing proportion of the population will see through and expose this large-scale swindle. Yet it will not be easy to counter such systematic disinformation.
With the deepening crisis a deep sense of unease will develop into political distrust of governments that carried out such operations. If the political game goes on without any major change the current right-wing governments will be replaced by centre-left governments that will further implement neoliberal policies. Similarly right-wing governments will replace the current social-liberal governments. Each new government will accuse the previous team of mismanagement and of having drained the public treasury, claiming that there is no room for granting social demands.
But nothing is ever unavoidable in politics. Another script is quite possible. First we must reassert that there is another way of guaranteeing citizens' savings and of restoring confidence in the credit system. Savings would be protected if the failing credit and insurance institutions were nationalised. This requires that the State as it acquires ownership also takes over their management. To prevent the cost of the operation to be borne by the large majority of the population that has no responsibility in the crisis whatsoever, public authorities must turn to those who were responsible: the amount necessary to bail-out financial institutions must be taken from the assets of large shareholders and executive officers. This is obviously only possible if all the assets are taken into account, not just the much reduced portion involved in the bankrupt financial companies.
The State should also file lawsuits against shareholders and executive officers who are responsible for the financial catastrophe so as to get both financial compensations (beyond the cost of the bail-out) and prison sentences if guilt is proven. Taxation should also be applied to large fortunes in order to finance a solidarity funds for those who are hit by the crisis, notably the unemployed, and to create jobs in sectors that are useful to society.
Many complementary measures are needed: opening companies' ledgers, including to trade unions, suppressing bank secrecy, prohibiting tax havens starting with a prohibition for any company to have any asset in or transaction with a tax haven, progressive taxation of transactions on currencies or derivatives, monitoring money exchange and capital flow, no new measure aiming at deregulating / liberalising markets and public services, restoring quality public services... The degradation of the economic situation will bring back onto the agenda the transfer manufacturing industries and private services to the public sector as well as the implementation of large-scale projects to create jobs.
This would make it possible to get out of the current crisis while taking people's interests into account. We have to gather energies to create a relation of comparative strength that would be favourable to the implementation of radical solutions with social justice as priority.
Translated by Christine Pagnoulle and Brian Hunt
Eric Toussaint, president of the Committee for the Abolition of Third World Debt CADTM-Belgium www.cadtm.org, author of The World Bank: Critical Primer, Pluto Press / Between the lines / David Philip Publisher, London - Toronto - Cape Town, 2008; The World Bank: A Never-Ending Coup d'Etat, VAK Mumbai-India, 2007.
 Both the governments and the EC, that ought to monitor adherence to the Maastricht criteria, carefully avoid the issue. When journalists insist, which seldom occurs, the answer they receive is that there was no other alternative. It should also be specified that like the failing banks the governments carry out off balance or off budget operations so as to hide the exact amount of their obligations in terms of public debt.
 It can be compared to the crisis in which Japan was caught from the early 1990s and from which it was barely emerging when it was hit by the present crisis.
 Barclays details this amount as follows 238 billion for Germany, 220 billion for Italy, 175 billion for France, 80 billion for Spain, 69.5 billion for the Netherlands, 53 billion for Greece, 32 billion for Austria, 24 billion for Belgium, 15 billion for Ireland, and 12 billion for Portugal.
 Of course the new money received from the State will not be used to buy treasury bonds only: it will also be used for new bank restructuring and direct profit.
 Over the two previous months Belgium, Autria and Spain had failed to collect eurobond money on the financial markets because institutional investors such as banks, insurance companies or pension funds were too greedy (See Financial Times 29 October 2008.)
 Let us hope we will be able to rely on MPs who do their job and on journalists in the major media who will be willing to develop a critical analysis of the way the bailing-out operations have so far be carried out.
 They could easily expose the sham and try to act within parliament. Since they don't do it, while it is obvious that they know the public debt will soar, it means they subscribe to the chosen direction. Actually they opted for a holy union, which they will only break in the run-up to elections.
From: Z Net - The Spirit Of Resistance Lives