The Economic Delusion Rut - Page 1

I heard that strong emotions, anger, fear, euphoria, etc., are usually preceded by distorted thinking and the results of these emotions are usually unintended. We do things that we wouldn't ordinarily do if we knew the facts. I think that strong, unbending beliefs are based on distorted thinking too. Recent events prove my point.



I received a letter from Congresswoman Barbara Lee, my representative to Congress from California's 9th District. It was a nice letter thanking me for contacting her, in anger, with a strong suggestion that she get her "stuff" together after she voted "no" to the first $700 billion bailout package. What was she thinking, I told her. She should have supported the bill! The letter, prepared two weeks after the second bailout bill passed and with lots of hind-sight, is very well written and very respectful and gives the rationale for her first "no" vote and her second "yes" vote. The second bill, she says, contained the language, "...many critical improvements that will protect the economic security of all individuals, not just corporations on Wall Street...," in her words, that she could support. Not true.



The facts, I believe, are that she was shocked by the enormity of Paulson's proposal, as was much of the nation, including me, and she was afraid. She didn't know anything about the proposed bill, didn't know its impact or even how the money would be used (neither did Paulson). According to the Contra Costa Times newspaper, her "no" vote was based on the many phone calls she received objecting to bailing out Wall Street and her belief that it did not contain language that protected the specific homeowners who faced foreclosure. Paulson had done a poor job explaining the bill and she had done a poor job getting to the truth and severity of the situation. She voted a populist vote to keep her job. She is up for reelection this year.



The days following her "no" vote, Congresswoman Lee received just as many if not more angrier phone calls asking her what the hell she thought she was doing. In her effort to save those few foreclosures, she was in fact jeopardizing the entire economy. She changed her mind and voted for the second bill, which contained much more money, $150 billion more, and less restrictions on corporations to satisfy (read this as bribes) to get Republican votes. Maybe California State Treasurer, Bill Lockyear, did explain to her the importance of the bill, as she claims, or maybe he didn't. By that time it was known throughout California that Governor Arnold Schwarzenegger had alerted Secretary Paulson of California's dire credit crisis of not being able to get money for payroll and critical state services. Maybe Lee got a copy of Arny's urgent email? In any event, she changed her tune and her letter is full of rationale that makes her look like an economic hero to her constituents. More delusion.



Then, two weeks passed before Paulson and Bernanke did anything with the authority provided in the bill, now called a "rescue." Finally, they followed Britain's lead by injecting money in banks, but only half-hearted. Britain's action was a bank takeover that is forcing the banks to loan money that gets the credit market going again. Paulson's action was to hand over the money to selected banks and soft-sell the idea that banks need to start lending, at their convenience. So now, two weeks later, U. S. banks are still freezing credit by holding on to the money. They are still afraid to loan money and they have chosen to watch out for their own skins (company survival) instead of the survival of the U. S. economy. The downward spiral gets more complicated and more dangerous as each day passes. Even the "D" word, Depression with a capital "D," is being mentioned. Fear! Paul Krugman, Professor of Economics and New York Times Op-Ed columnist, reports that even the most knowledgeable market managers, the hedge fund managers, are bailing out because of fear.



As the 20-20 vision of hind-sight gets better, I'm thinking that Bush, Paulson and Bernanke are still hanging on to the delusional thinking of the old free market ideology; that companies, and banks specifically, can still self-regulate. They are just as afraid as everyone else is and they are sticking to their distorted, unbending beliefs. Even when Greenspan admits to Congress that he is "shocked" and "was mistaken" in his belief that the market would self-regulate, they are still hanging back on forceful action. Maybe what's unfolding points to the greatest illusion we've been sold that built the delusional rut we dropped into years ago; that markets should be free of government controls, that market forces would provide the self control - the supply-side economics (Reaganomics) sold to President Reagan by the Corporate Libertarian ideologues. The same economics that McCain believes in.



One thing for sure, 20-20 hindsight confirms that we are just chickens running around with our heads off. As for me, being completely in the dark on these complicated matters way beyond my knowledge, I just hope and pray that Warren Buffet, George Soros and T. Boone Pickens are right; that the market will come back with a vengeance in my life time. So, and since I bought at what I thought was a low point when the DOW was around 8,500, I'm holding on in the stock market and trying not to let my fears get to me. My wish, whether I gain anything or not, is that someone goes to jail over this. One or more of those big executives who made billions from proliferating those Credit Default Swaps would be a good place to start. Those executives who make billions from the bailout (rescue?) are next. But, lets put them in jail with just as much calmness, thoughtfulness and detachment as they used when they ripped us off. We should be determined, not emotional.

Well, my intent was to followup with more specific economic issues before I get to religion in America, but I can't pass this up. In their article Christian right intensifies attacks on Obama, journalists Eric Gorsky and Racheal Zoll, Associated Press Religion Writers, hit upon a major and dangerous source of ignorance in America. It appears that the Focus on the Family Action, a Christian social conservative charity founded by dominionist James Dobson is spreading its usual doom and gloom about Obama by sending an Action Letter to all affiliated organizations. One statement is astounding; I quote the article:

The goal was to "articulate the big picture," said Carrie Gordon Earll, senior director of public policy for Focus on the Family Action. "If it is a doomsday picture, then it's a realistic picture," she said.

Really? Do you mean to tell me that a "doomsday picture" is a "realistic picture?" Are you crazy?

The problem is that millions believe this propaganda. This is the tripe that causes an elderly woman to tell McCain that Obama is a Muslim. According to the article, which will be widely believed through its wide distribution through several thousand churches, Obama will cause a number of disastrous situations, including:

• Terrorist attacks in the U.S.
• Disbanding the Boy Scouts,
• Russia occupying the Baltic states,
• Al Qaeda overwhelming Iraq,
• Long lines for surgical procedures, and
• No access to hospitals for people over 80.

What nonsense. Please read the article for yourself and dismiss this stuff as radical extremism from the Christian fundamentalist demagogues. What we need is a more realistic approach to the big issues facing America, not fear politics. Obama seems more than capable of handling world changes long before we have to disband the Boy Scouts.

I've been following the economy and markets for a number of years and I've always thought the laissez-faire, self-regulated market was the right thing to do. The free, capitalistic market would be the great equalizer. After all, it is the free markets that are slowly changing countries like China and Vietnam into more docile, friendly and human countries. Extreme governments are slowly coming around to democracy. Besides, why would market leaders choose self-destruction by leading their companies into high-risk gambling with investor and depositor money? I persuaded myself that all was good and that most, if not all, financial managers would honestly asses risk and use other people's money wisely. But, in 2005 I sold a condo for twice what I paid for it only six years earlier and my wife sold her mothers estate house for a whopping $700k in a middle income San Francisco Bay neighborhood. I was stunned at how much we got and bewildered at how people could afford the high prices. In August 2006 when the real estate bubble began to burst I began to look closer at this deregulated system I believed in and I began to see that I was mislead. I've now come to believe that nearly all Americans were mislead on basic economic policy just like many have been mislead by the Bush administration. Bill Maher has it right; Americans are too dumb to be governed. Being stupid, it seems, is pervasive in American society.


I came to the conclusion that Americans are politically stupid when I woke up in November 2000 and heard that George W. Bush was president elect. Four years later it was obvious to the world that Americans had a loose screw; as noted when Bush was reelected in 2004, the British newspaper The Guardian ask the question on its front page, "How could 57 million people be so dumb?" Good question! Now, after eight years of Bush and even more years of Republican backed corporate deregulation, most Americans wonder what happened.


Why do we have an overabundance of ignorant, stupid people in America? Oh, I know that ignorance and stupidity are not the same, but continuing ignorance when information is so readily available is being stupid. I think the answer is that ideologues and demagogues have become extremely sophisticated in conning everyone with their crap. Ideologues of every stripe whether it be political extremists, religious fundamentalist, corporate libertarians, neo-conservatives, neo-liberals and other stripes have some utopia in mind for all of us. Utopias have a common flaw in that not all who will be forced to live in it will like it. Marx, Stalin and Hitler had a solution for those who either couldn't or did not want to live in the utopia they imposed: death or imprisonment.


One thing is obvious from the market crash and that is that ideology is forgotten when a meltdown threatens the livelihood of our population. Oh, there are still too many staunch ideologues screaming "socialism" and "big government" that still threaten a full recovery. What would they have us do? Let the entire economy fail completely and return to the breadlines of the 1930s? Think about that. That would be stupid. Others, however, such as Paulson, Bernanke and even Greenspan, appear to have come to their senses, at least to some degree, but not with a full admission that free market laissez-faire is the wrong path. But they are making an effort so save us.


If the latest presidential poll averages are any indication, too many Americans are still ignorant; with 42.6% favoring McCain-Palin. A McCain-Palin administration would be disastrous and no matter what your argument is, it would be a continuation of the Bush presidency because the vast majority of administration positions would be filled with the same people currently in office. In order for a new administration to gain control over the government it will need to fill approximately 4,000 to 5,000 political appointments; from the Treasury to Defense Department to Homeland Security to the Justice Department. If the positions are not filled, the same ideology existing today will continue in those positions and a McCain-Palin administration would not likely fill those positions with anyone believing in different ideology. Think about it.


Not to mention the overwhelming evidence provided by some of the highest conservative thinkers in our country that Palin is not qualified to be Vice President. She doesn't know anything about the United States Constitution or the constitutional duties of the Vice President. She has no knowledge of any aspect of U. S. Government and worse, she has no curiosity about learning. She is another Bush and the fact that McCain could at his age die in office, she could be our president; with her finger on the nuclear trigger. I can't think of a better reason to vote against McCain-Palin. She is dangerous.


Unfortunately, I've started my blog too late in this election to have any affect on anyone, but my advice to you if you are one of those 42.6% supporting McCain is to take another look at Obama. Turn off Hannity and Colmes, O'Rielly, Limbaugh and Savage (representative of the most dangerous propagandist in this nation today) and tune in to other, more reliable news and opinion sources. If you continue a daily diet of right-wing propaganda, you will continue to be dangerously ignorant of the truth about where our country needs to go and about Obama.


I hope in future posts to be more specific toward encouraging people to find better sources of ideas, to be more tolerant of other ideas and, perhaps, find the center of extremes. Maybe more of those 42.6% will change their mind. I hope so. I also hope to figure out blogging and to make this blog a little more presentable. At the moment, though, the information is more important than appearance. I apologize if the appearance is needful of improvement.