The Financial Crisis And The Decline Of American Empire
Congress will vote tomorrow whether to back a Senate revision to the proposed $700 billion dollar economic bailout package. The President, as always, continues to play the fear card, claiming that it is an issue that goes beyond Wall Street and that the House Of Representatives has a responsibility to average Americans to support the deal and thus instill a sense of stability. Of course, the House’s rejection of the initial bailout plan was very much aligned with public sentiment, something that the White House continues to overlook.
In today’s Guardian, historian Howard Zinn provides commentary with regards to the crisis which is noteworthy…
“This current financial crisis is a major way-station on the way to the collapse of the American empire. The first important sign was 9/11, with the most heavily-armed nation in the world shown to be vulnerable to a handful of hijackers.
And now, another sign: both major parties rushing to get an agreement to spend $700bn of taxpayers’ money to pour down the drain of huge financial institutions which are notable for two characteristics: incompetence and greed.
There is a much better solution to the current financial crisis. But it requires discarding what has been conventional “wisdom” for too long: that government intervention in the economy (”big government”) must be avoided like the plague, because the “free market” will guide the economy towards growth and justice.
Let’s face a historical truth: we have never had a “free market”, we have always had government intervention in the economy, and indeed that intervention has been welcomed by the captains of finance and industry. They had no quarrel with “big government” when it served their needs.
It started way back, when the founding fathers met in Philadelphia in 1787 to draft the constitution. The first big bail-out was the decision of the new government to redeem for full value the almost worthless bonds held by speculators. And this role of big government, supporting the interests of the business classes, continued all through the nation’s history.
The rationale for taking $700bn from the taxpayers to subsidise huge financial institutions is that somehow that wealth will trickle down to the people who need it. This has never worked.
The alternative is simple and powerful. Take that huge sum of money and give it directly to the people who need it. Let the government declare a moratorium on foreclosures and give aid to homeowners to help them pay off their mortgages. Create a federal jobs programme to guarantee work to people who want and need jobs and for whom “the free market” has not come through.
We have a historic and successful precedent. Roosevelt’s New Deal put millions of people to work, rebuilding the nation’s infrastructure, and, defying the cries of “socialism”, established social security. That can be carried further, with “health security” – free health care – for all.
All that will take more than $700bn. But the money is there. In the $600bn for the military budget, once we decide we will no longer be a war-making nation. And in the swollen bank accounts of the super-rich, by taxing vigorously both their income and their wealth.
When the cry goes up, whether from Republicans or Democrats, that this must not be done because it is “big government”, the citizenry should just laugh. And then agitate and organise on behalf of what the Declaration of Independence promised: that it is the responsibility of government to ensure the equal right of all to “life, liberty, and the pursuit of happiness”.
Only such a bold approach can save the nation – not as an empire, but as a democracy.”
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October 2nd, 2008 at 1:22 pm
In this case, the axiom “Those who cannot learn from our history are doomed to repeat it.” might be a good thing.
John McCain, you’re no Roosevelt.
October 2nd, 2008 at 1:34 pm
Neither is Obama for that matter.
October 2nd, 2008 at 1:36 pm
After looking up the definition of “declination,” I am quite comfortable suggesting that “decline” would have worked just fine in that headline.
Love and kisses, your neighbourhood Grammar Nazi.
October 2nd, 2008 at 1:38 pm
[quote comment="67362"]Neither is Obama for that matter.[/quote]
So true. Gotta get elected. The only change we’re going to see regardless of who gets voted in is what’s left of my paycheck after bills and rent.
October 2nd, 2008 at 1:39 pm
See peters, you learn something new every day! Fixed.
October 2nd, 2008 at 1:40 pm
The $700 Billion should not be used to bail out Wall Street. I don’t understand why saving the asses of the people who shit on the little guy would even be an option. If the markets go sour than everyone should just allow it to fix itself without any intervention at all. I think that would help a lot of things and put things back into perspective for everyone. That said, the 700 billion could be given back to the people to help them deal through the recession.
Bailing out the markets is bailing out all the day traders who spend their time watching the markets and when they believe things are going to get bad opt out at quick rates causing the market to plummet. The people who are really affected don’t have the luxury of watching their investments 24/7.
October 2nd, 2008 at 1:42 pm
The alternative, whether good or bad, is always simple and powerful. But nobody ever chooses the alternative. In this case, it is a pity.
Instead, we can look forward to the continuing swelling of U.S. military budget and the resurrection of financial institutions (under former management, I am sure). Just what American citizens need at the moment.
October 2nd, 2008 at 1:52 pm
I resent Zinn’s comment regarding the ‘free market’, more importantly, it is without merit. Let’s remember who wants this deal squashed, Republicans. In truth, most of the House and Senate Dems, even conservative Dems, want to make sure that some constiuent, program etc benefits from this which is insane. The profiteering from this bailout is disgusting and last thing the US needs are social programs funded by the govt. NO WAY! And if Mr. Zinn recalls, the rate of unemployment during the recession of 1930 as opposed to even our current unemployment he will acknowlegde WHY the depression occurred as well as why most of FDRs programs failed and kept our nation in a protracted recession behind the rest of the world. The Foreclosures must happen, the companies must go bankrupt and wall street needs to hit hard. The expansive growth in our economy is slowing and I see a recession being integral in resetting a growing stagnant economy. Everytime the government has intervened with a fiscal crisis, it has failed miserably so it is inevietable that a recession will be in the future now that this bailout is occurring. Unfortunately, Bush is being guided in many ways by Bernanke (who is partially responsible for this mess). Our government is not a bank or employment agency. Mr Zinn needs a refresher course in the exact nature of our US Constitution and the power of the Presidency.
October 2nd, 2008 at 2:00 pm
The bail out is not really for the Wall Street companies, it’s for foreign investors.
http://ca.youtube.com/watch?v=ONUSxiGN4m4
These are senators saying this, why? Because why else would Paulson explicitly say he will vito any provision that restricts the support to American companies? The senator claims to know that China, UK, Saudi Arabia (to name a few) are pressuring for their money back.
Who sold them the bad debts in the first place? Wall Street’s elite did.
Some are speculating this is an economic war against the US. Wise, you’d never win in a military war against the US, but clearly you can win economically.
/* CONSPIRACY THEORY */
Say 9-11 wasn’t really Bin Laden’s group. Say it was orchestrated to create fear, fear to justify spending on military to scare the wold from real attacks. Say it was known that such a reaction would occur and the spending help reduce the economic strength. Now you can have a setup for the AMERO. OR You have the setup for the only war you will actually win, an economic war!
You won’t win an economic war with the US when they are reserved and riding high, because let’s face it, they were a real super power (culture, economics, military, influence etc…). They were the real super power.
However, if you know their culture, and you do because you (anywhere in the world) are bombarded with it, you know they have a problem with fear. You know it controls them. So create fear, get them to give away their freedoms in the name of national security. Use the fear to get them to attack other nations whom would not normally attack the US. Use the fear to get them to spend fortunes on military, because you know that’s what they have always done.
Use the fear to put them in a position where you don’t need any military might at all, you have them on their knees economically.
Interesting setup, yes, plausible, yes, likely, maybe, reality, who knows. But let’s just entertain that thought for a moment. How many countries would want to pull a stunt like that? How many hate the US? Not their citizens but their policies and control? Many do, not the masses, but many leaders do. Maybe even leaders in their own country!
When you really know your enemy you can use their habits to your advantage. And maybe that is just what has happened here. Could it be one country? Maybe. But I am willing to bet it was more of a global effort. People inside the US, people in key positions in many other countries, all working together to get the super power back under control.
Or maybe it was an intent to bring them down all along. Who knows.
But this conspiracy, I just thought of now, I still think is possible.
Or maybe I’ve watched too many episodes of 24 in the last two days.
What do you all think?
Look at the theory not in part, but in whole. Think of it as a chord progression. Separately, the chords will each give meaning and they may conflict when you prepare them in your mind. But you were not the creator of the chord progression, so you didn’t see the same picture as the creator did. Now sit back and listen to the chord progression and you’re amazed at how all these seemingly isolated chords have come together to form a different, deeper meaning than the individual chords.
October 2nd, 2008 at 2:01 pm
Well, being that he’s the author of one of the most important works regarding US history, I think claiming he needs a refresher course in anything is a little much.
October 2nd, 2008 at 2:09 pm
[quote comment="67370"]I resent Zinn’s comment regarding the ‘free market’, more importantly, it is without merit. Let’s remember who wants this deal squashed, Republicans. In truth, most of the House and Senate Dems, even conservative Dems, want to make sure that some constiuent, program etc benefits from this which is insane. The profiteering from this bailout is disgusting and last thing the US needs are social programs funded by the govt. NO WAY! And if Mr. Zinn recalls, the rate of unemployment during the recession of 1930 as opposed to even our current unemployment he will acknowlegde WHY the depression occurred as well as why most of FDRs programs failed and kept our nation in a protracted recession behind the rest of the world. The Foreclosures must happen, the companies must go bankrupt and wall street needs to hit hard. The expansive growth in our economy is slowing and I see a recession being integral in resetting a growing stagnant economy. Everytime the government has intervened with a fiscal crisis, it has failed miserably so it is inevietable that a recession will be in the future now that this bailout is occurring. Unfortunately, Bush is being guided in many ways by Bernanke (who is partially responsible for this mess). Our government is not a bank or employment agency. Mr Zinn needs a refresher course in the exact nature of our US Constitution and the power of the Presidency.[/quote]
Are social programs to be funded by private companies? Could you not take a different look at what is happening in the States right now - it is a man-made disaster. People are loosing their jobs and their homes. Hurricane has a similar effect, but it is a natural disaster, and government responds, by relocating people, providing food and supplies (I am discounting Katrina, of course).
The government has to intervene here as well and in a similar way. It should, for the time being, take over the role of a bank and an employment agency, because it’s responsibility is, and quoting
” to ensure the equal right of all to “life, liberty, and the pursuit of happiness”
If they bail out banks, they will be bailing out the wrong people, they need to use that money to help Americans get through these times.
October 2nd, 2008 at 2:16 pm
Have you ever seen the movie “Le decline de l’empire américain”? The story revolves around four men and four women, most of them university history teachers, sharing stories before a gathering for a dinner on a week-end. It’s all entertaining bullshit — and so is Howard Zinn’s suggestion of a better solution to the current financial crisis.
“The alternative is simple and powerful. Take that huge sum of money and give it directly to the people who need it. Let the government declare a moratorium on foreclosures and give aid to homeowners to help them pay off their mortgages. Create a federal jobs programme to guarantee work to people who want and need jobs and for whom “the free market” has not come through…. All that will take more than $700bn. But the money is there. In the $600bn for the military budget, once we decide we will no longer be a war-making nation. And in the swollen bank accounts of the super-rich, by taxing vigorously both their income and their wealth.”
I’m all for taking the right decision in the long term. But it’s just not realistic to think that a plan like that would work. We are too far deep in the dung to see US government rise above it all – certainly not the current one. And in the end, it’s the small guy who is hurting – big time. Is everyone having fun watching their RRSP and other investments dwindle down to nothing?
October 2nd, 2008 at 4:01 pm
You can give all the money you want to the people but this is not a people problem. America is the hub of the digital financial worldwide system. Now, their is a worldwide run on the banks. Their is a major liquidity problem which means, to fulfill the worlds need of solid assets instead of the invisible digital representation of money, the financial world is putting their money in T bills or other government securities. A worldwide run on the banking system.
And this bill will only be the start of re-capitalizing banks that saw much of the value they showed on their books disappear. $2 trillion may be the final cost of the financial restructuring in America and $10 to $15 trillion worldwide. Without allowing the system to de-leverage, you will see credit cards balances being called, the foreclosure problem will deepen and line of credit will severely be limited. The world bankers really f*cked up. Japan and Germany is the place to be as well as Ireland since all your deposits are now guaranteed by the Irish government. The next step will be more focused on small businesses and home owners. Maybe this interpretation is wrong but I reviewed a lot of material of which the majority of the information points to this conclusion. But really, it’s like reading tea leaves.
By the way $600 billion divided by 300 million = $2000. And just in case anybody may be interested, soon you will be hearing the word, quadrillion which is the next large number for you to wrap your head around.
October 2nd, 2008 at 4:24 pm
Zinn has it right that the US has never been a total free market. And once you start tinkering with a system, be it economic, or your backyard ecology, you can never go back to purity. So it’s just what percent of socialism v. capitalism do you want. I have a hard time giving more power to Central governments. Zinn has more faith in human nature then i’ll ever have : )
We are tolerating 30% fraud in Medicare. Matt, imagine your management was cheating you of 30%. What if ASCAP was cheating you 30%.? You wouldn’t want to give them more control over you, would you. Zinn is in love with socialism. Which is fine-but I think dated. There has to be a happy medium.
October 2nd, 2008 at 4:24 pm
Zinn’s alternate idea is very interesting. I did some math, and if the gov’t instead took that 700 billion and gave each American adult (18 ) an even share of that money, each American adult would receive about $3000.
Of course you couldn’t do it that way, it might be better to give out the money based on your income or how much you paid in taxes in the last few years. It would certainly give the U.S. economy a huge boost. However, does it fix the morgage & loan crisis? The thing about this crisis is that if the banks and lenders are screwed & have no more money to lend, so is anyone who wants to buy a house via morgage, get a college loan, get a loan for a small business etc. So if the gov’t did give the taxpayers the 700 billion, would it be enough stabilize the banks?
October 2nd, 2008 at 4:27 pm
I think they should give me the $700B
October 2nd, 2008 at 4:28 pm
[quote comment="67384"]And just in case anybody may be interested, soon you will be hearing the word, quadrillion which is the next large number for you to wrap your head around.[/quote]
Why can’t they just follow the SI units?
Kilodollars - 10^3
Megadollars - 10^6
Gigadollars - 10^9
Teradollars - 10^12
It’s just easier for techies to follow.
Joking aside, it will take a lot of money to repair this damage, but I do not think throwing money at it will solve the problem. Real measures have to be taken.
Why is this bill the only thing shown to Congress and the public? And why, when this was forseen back in February and earlier, wasn’t a list of options brought forth to Congress and the public where things could be discussed and analyzed before the shit hit the fan?
It seems too suspicious, this whole rush and save with a bailout plan.
October 2nd, 2008 at 4:30 pm
[quote comment="67390"]I think they should give me the $700B[/quote]
That seems greedy. I’d be happy with .1%.
October 2nd, 2008 at 9:16 pm
So, Zinn’s solution is a $2,300 per taxpayer stimulus package? O.K. There’s no question that the current proposal is a bad bill. You can’t solve an economy-wide insolvency problem by restoring liquidity to the banks. Even if you take the bad debts off the banks books so they can lend again, if you don’t rectify the insolvency of consumers, the banks won’t lend. And, if you’re a homeowner whose payments went from $800 per month to $1,400 per month, even with Zinn’s $2,300, you’re still going to be in default on your mortgage and credit cards, and you’re still going to have a problem paying for $4.00 per gallon gas. His solution is basically non-sense, though I don’t object to some of his more idealistic sentiments.
October 2nd, 2008 at 11:06 pm
[quote comment="67391"][quote comment="67384"]And just in case anybody may be interested, soon you will be hearing the word, quadrillion which is the next large number for you to wrap your head around.[/quote]
Why can’t they just follow the SI units?
Kilodollars - 10^3
Megadollars - 10^6
Gigadollars - 10^9
Teradollars - 10^12
It’s just easier for techies to follow.
Joking aside, it will take a lot of money to repair this damage, but I do not think throwing money at it will solve the problem. Real measures have to be taken.
Why is this bill the only thing shown to Congress and the public? And why, when this was forseen back in February and earlier, wasn’t a list of options brought forth to Congress and the public where things could be discussed and analyzed before the shit hit the fan?
It seems too suspicious, this whole rush and save with a bailout plan.[/quote]
Computers and highly sophisticated computational methods already dominate the share market. It can be appallingly difficult to work out what’s going on. It also makes me wonder what might happen if there was some kind of literal financial “crash” if you see what I mean. It also makes me wonder who would be responsible for that. It seems some financial/economic consequences are too big to hold people accountable for, which is pretty dangerous.
October 2nd, 2008 at 11:18 pm
I really don’t think that’s what he’s saying. He doesn’t mean give everyone an equal share of the money, he said “…give it directly to the people who need it”. And one way he suggested was to “Let the government declare a moratorium on foreclosures and give aid to homeowners to help them pay off their mortgages.” My very layman economists understanding is this:
If there are a lot people who have mortgages they can’t afford, because the lenders didn’t try to make sure everyone could pay their mortgages before handing them out, the lenders are in trouble because those mortgages that won’t be paid aren’t worth very much. With a lot of these bad loans, the financial institution is in trouble, because the money they supposedly had (money & interest paid back from mortgage loans) isn’t really there when they don’t get paid. So you can give a bunch of money to the big guys to keep them from going bankrupt and not being able to lend anymore, or you could give money to the people who can’t pay their mortgages & make them use it to pay off the mortgages. They keep their homes, and the lenders get the money they are owed so they aren’t losing money. Am I way off base?
I guess some people don’t like this idea because they think the people who took out mortgages they couldn’t pay were irresponsible, so they shouldn’t be “rewarded”, but weren’t the lenders even more irresponsible? As I understand it, it was profitable short term, before everything collapsed, and people were misled into thinking they could pay for things they couldn’t. I think people should be responsible for their bad decisions, but I also think Americans (and Canadians) are encouraged to get into debt and buy more more more even when it’s unwise, by the consumerist society we live in. If you’re going to have to bail someone out to “fix the economy”, I’d rather see that money go to people who would lose their homes than the big financial institutions who would screw people over for massive profits.
October 3rd, 2008 at 1:09 am
And why is this no different then anything that has been done before? What a joke!! Look at what’s included in this bail-out bill:
” Dropping a 39-cent excise tax on wooden arrows made for children, a cause of politicians in Oregon to help manufacturers in their state;
Extending a cut in the excise tax on rum made in Puerto Rico and the U.S. Virgin Islands;
Increasing funding for the Wool Research Trust Fund, which provides grants to wool makers and sheep farmers, and for the Black Lung Disability Trust Fund;
Extending tax breaks for film and television productions, mine rescue training, undercover operations, motorsport race tracks, railway maintenance, idling reduction units in trucks, refined coal used by steel producers, small wind power projects, donations of food or books to charities, hurricane relief employees and people affected by the Exxon Valdez oil spill;
New rules for mental health benefits and the disclosure of information in terrorist cases.”
October 3rd, 2008 at 2:41 am
Zinn’s opinion of US History is hardly backed in fact or even scholarly observation. He perpetuates the false interpretation of US economics and banking. Much like the majority of Americans, he has no grasp of what exactly this bailout and subsequent Presidency means. Its truly frightening especially being one person watching it unfold as it is. Despite how much this bailout goes against the grain of the US Constitution, the only way to reset this economy is the bailout infusion. Most people would prefer the type of Warren Buffet bailout where the govt. could benefit from preferred stock options from private companies as opposed to tax payers but as we know, companies fail. The concessions and revisions to the bailout as of late are some of the most heinous violations of tax payer money in history and it is staging a dangerous precedent. All one can do now is pray, at least that is how powerless I feel. Unfortunately, we have Congressman and Senators who don’t even know the balance of their own checkbook, grandstanding on CSPAN like they have a clue. Furthering the misinformation is the press and media who can’t find a brain among them to explain what is REALLY going on. For some reason, people are gravitating towards Obama in the polls when his social program agenda will push America not only into a deep recession, but most likely into a depression. One can only hope that if elected, Obama’s Dems in the House/Senate will have enough sense not to allow most of the programs to pass. Again, Hope. The entire thing disgusts me.
October 3rd, 2008 at 5:24 am
Similar discussions going on in Germany. The US Government has urged the country to account about 100 billion Euros to rehabilitate the global financial system. Tax payers (myself included) simply don’t see the point in such measures. Why should german tax payers pay for US failed financial policies?
Peer Steinbruck, german minister of finance, is currently trying to sell this plan as for the benefit of german financial instutes and their customers. Today is the 3rd of October - Unfication Day and national holiday in Germany. A perfect stage for Mr. Steinbruck and his bootlicking towards the economic aristocracy, whose megalomania always is of absolute priority, to the expense of the little man.
October 3rd, 2008 at 6:13 am
[quote comment="67465"]for the benefit of german financial instutes and their customers. [/quote]
Argh, read: institutes.
October 3rd, 2008 at 9:45 am
I know the first thing I’d fix if I wanted to make the US a more stable place.
http://www.pbs.org/wgbh/pages/frontline/shows/asylums/
I don’t think it would cost anything near $700 billion to get most of the mentally ill people out of the US prison system and create the baseline programs they need to function out in the community.
Throw in education, healthcare, housing, jobs, and so much more and this article makes complete sense.
The US has turned into a hollow shell with the defence and financial sectors presenting a strong facade to the world. We’re starting to see just how thin that veneer has become. The only way for Americans to get out of this mess is to come together as they did during the Depression under FDR and turn their backs on the politics of greed and fear.
October 3rd, 2008 at 10:46 am
[quote comment="67387"]We are tolerating 30% fraud in Medicare. Matt, imagine your management was cheating you of 30%. What if ASCAP was cheating you 30%.? You wouldn’t want to give them more control over you, would you. Zinn is in love with socialism. Which is fine-but I think dated. There has to be a happy medium.[/quote]
I see what you’re trying to say Bob, but I already live in a nation with socialized healthcare, and Socan pays me the same rate as it always has :)
October 3rd, 2008 at 11:09 am
So now Congress has passed the revised bill granting the $700 billion dollar bailout, was the first rejection just a sham?
October 3rd, 2008 at 11:37 pm
Matt; God Bless Mailbox Money!!!!
October 4th, 2008 at 4:56 am
[quote comment="67387"]Zinn is in love with socialism. Which is fine-but I think dated. There has to be a happy medium.[/quote]
It’s already there: Neosocialism being the magic word. Bringing socialism to people in the old marxist-leninist kind of style that never worked without totalitarian measures might be dated, I agree. But I consider it possible to think some of the old communist ideas over and create a modern idea of justice as fairness, that would work without oppression by a leading elite but solely through the fact that people feel fairly treated and thus start to engage in keeping that system up.
October 5th, 2008 at 1:01 am
Good ideas, Tuulli. Perhaps the younger generations can pull diverse peoples together. How that can be done, I have no clue. There are so many obstacles. Remember, we are dealing with human beings. The religious might say, “Oh people are imperfect. We are all sinners. Lying, cheating and stealing are to be expected. “. The scientist might say: “Oh, people are just animals. We mean well, but sometimes the old Lizard Brain kicks in and we do things out of instinct.” What do we do with those of us who have not moved beyond Social Darwinism? You know, somtimes the best, most logical action on your part might be to kill your neighbor. Some religious are so convinced that their world is in an afterlife, that they care little for the here and now.
Culture-wise; there are chasms I fear won’t be bridged in my lifetime. If you would suggest to some culture that women and children have rights, they would laugh at you. Some cultures still practice slavery; probably the most savage of crimes. Sexual abuse of children is accepted in many cultures. Mutilation of women’s sex organs is condoned. Those examples are the tip of the ice berg.
You can find that most people want the same things in life; but you also must understand that there is evil in the world who will exploit and kill to achieve their own ends. These people do not just belong to certain political parties, certain religions or nations. Their ranks span all of that.
You might think that with this marvelous technology your generation has, communications and thus understanding would be easier. But don’t forget; lies as well as truth, move at the same speed. The internet and blackberry phone-cameras are merely tools, ripe for exploitation as well as enlightenment. Don’t forget, when the Printing Press was invented, the Dark Ages were thought to e gone for good!
I guess that’s why I preach local action. Give what you can, where you can. Start with yourself. You want better medical care? Start by stopping smoking, losing weight, get excercise, eat better and drink moderately. If everyone did that, the cost of medical care would plummet! Walk or bike. Pay attention to your neighbors. Do things for the elderly. Shop for them-feed them nutritious meals. Heck-just spend time with them! Make sure the homeless on skid road have warm hats and gloves. Get the alcoholics food when you can. Do you have skills? Can you teach guitar at the schools? Give computer classes for the elderly. In other words, be a citizen of your city, country, world. Don’t wait for Governments to tell you what to do-screw them. Do what you want, when you want, with whomever you want. Less government is better government. Tell them you want your taxes back; you’ll put it to use close to home!
There are a lot of bright young lights on this site; start acting like it! : )
Take care of each other; stop bitchin’ and pitch in!
Rant off………..