The guess is that the financial crisis and economic downturn wont go away any time soon. The consensus is that it will take several years to undo itself.
There are several reason why this crisis occurred, most of them listed before. But one that is never or hardly mentioned is the fact that the economies of the world have overproduced and there is to much stuff out there. The excess and oversupply will take time to be consumed and dealt with. This is a worry Marx had about capitalism, a natural penchant for producing and producing. Marx thought that at some point it would produce too much. Well, the world has. Perhaps there is just to much capitalism occurring in the world.
I think a classic example of overproduction is Dubai. Who is going to occupy all the real estate developed there? It is a place that is competing for the same business and entertainment dollar that a number of other centers around the world are. There just isn't enough consumers in the world to soak all this up. Someone once said, if you build it they will come. However, there is no yet enough prosperity around to absorb the offerings of Dubai and the numerous place like it.
Tuesday, November 25, 2008
Monday, November 17, 2008
Socialism
George Will, a columnist for the Washington Post, is a conservative, a Republican and is against socialism. He hates socialism like every good American conservative does. The other day he wrote an article in which he sounded very exasperated because no matter who was in power in Washington, be it Republicans or Democrats, Government kept getting bigger and more socialistic. Perhaps he hasn’t been reading the tea-leafs, but maybe socialism is the wave of the future. His article was entitled “‘Socialism’? It’s Already Here”.
When Bill Clinton was president he reformed social welfare and famously declared that era of big government over, then proceed to balance the budget and leave a surplus for the next administration. During his administration America was fairly solid in capitalism’s corner. And George Bush, the next president, reinforced those values by declaring himself a fiscal conservative who promised to keep government small. Ironically, though, it was Bush’s ‘supposedly’ conservative administration that pushed socialism to new heights. If Bush, who George Will enthusiastically supported, and his administration had been better managers, administrators and overseers most likely the creeping socialism America is experiencing today would not be occurring. Bush&Co.'s socialism is manifested in the mass financial bailout and ‘nationalization’ his administration has had to institute to rescue the failing U.S. economy.
In the Guardian Naomi Klein wrote and op-ed piece entitled “The Bush gang’s parting gift: a final looting of the public wealth”. What she was saying is that the bailout money Bush&Co. is spending in combating America’s financial crisis is going to its friends and cronies. Klein mentions that other rulers throughout history, before leaving office, had similarly raided the treasury to distribute money among their friends and supporters. In Klein’s eyes it appears that Bush was doing the same thing. A part of me thinks that perhaps Bush created the financial crisis for that very purpose, so he’d have an excuse to raid the lauder and distribute its goodies to his friends, the people on Wall St., before leaving office. I had a similar thought about 9/11, that Bush let it happen (he was warned about its possibility but ignored it) so he‘d have an excuse to invade Iraq.
There is no doubt in my mind that Bush&Co. is responsible for the financial crisis America and the rest of the world is facing today. It is not that they are responsible for everything that caused it or everything that has gone wrong. To be fair, the seeds of its potentiality were sown over many years, prior to Bush. But it is Bush&Co’s philosophy of unfettered markets and lack of oversight and discipline that pushed it over the top. What compounded the crisis further were Bush’s tax cuts, while simultaneously having a war that dangerously ballooned the deficit. It was all unsustainable. Bush&Co. also conveniently neglected, out of ideological zealousness, the rules and regulations that had developed over years to protect capitalism from its worst excesses. Elliot Spitzer, the former attorney general and governor of New York State, recently wrote an article in The Post on exactly that point. As state attorney general he and the other 49 US state attorney generals wanted to enforce laws to stop the predatory lending practices that were fueled the housing bubble and creating the subprime debacle, which eventually cause the financial crisis. However, they were blocked by Bush&Co. with a little know federal law, from the Civil War era, that was designed for the purpose of blocking states from acting on their own. And this, from a conservative administration that once said it would adhere to the Constitution and not interfere with state rights.
I am surprised that I haven’t heard any conspiracy theories about the financial crisis like those made after 9/11. If I was a conspiracy theorist I might thing Bush&Co created the crisis on purpose, to spread it around the world in order to bring the world to heal and under its influence again because for years America had been losing ground as the financial hub of the world. Until London has been gaining as a money center and much of the world, due to globalization, was bypassing New York as a financial deal maker. I’m thinking that Bush&Co. was also concerned about China and the rich oil producing states, awash in American dollars, that they would use those dollars as a weapon to destabilize and diminish American’s position it the world. My conspiracy mind is thinking that Bush&Co. wanted to preempt those forces that were nibbling at America’s financial prowess by creating a financial contagion, which would leave the rest of the world at the mercy of US and its bailout cure.
There are always unintended consequences, as Margaret Thatcher once pointed out. The unintended consequence Bush&Co. didn’t foresee is that with its financial bailout it was going against its own philosophy, its ideological practice of none interference and leaving markets to their own devises. And all this due to the fact that it acted recklessly and incompetently in economic matters earlier. And with its solutions it fell into the trap of employing the socialistic tactics it abhorred to help resolve the crisis and the contagion it created. Also, in acting this way, in a socialistic manner, with government intervention, America was now moving more in line with the rest of the world, something that sends shudders up the spine of conservatives like George Will. Furthermore, because of this economic crisis Bush&Co. lost political power – the White House, Congress, and demoralized its own Republican Party.
When Bill Clinton was president he reformed social welfare and famously declared that era of big government over, then proceed to balance the budget and leave a surplus for the next administration. During his administration America was fairly solid in capitalism’s corner. And George Bush, the next president, reinforced those values by declaring himself a fiscal conservative who promised to keep government small. Ironically, though, it was Bush’s ‘supposedly’ conservative administration that pushed socialism to new heights. If Bush, who George Will enthusiastically supported, and his administration had been better managers, administrators and overseers most likely the creeping socialism America is experiencing today would not be occurring. Bush&Co.'s socialism is manifested in the mass financial bailout and ‘nationalization’ his administration has had to institute to rescue the failing U.S. economy.
In the Guardian Naomi Klein wrote and op-ed piece entitled “The Bush gang’s parting gift: a final looting of the public wealth”. What she was saying is that the bailout money Bush&Co. is spending in combating America’s financial crisis is going to its friends and cronies. Klein mentions that other rulers throughout history, before leaving office, had similarly raided the treasury to distribute money among their friends and supporters. In Klein’s eyes it appears that Bush was doing the same thing. A part of me thinks that perhaps Bush created the financial crisis for that very purpose, so he’d have an excuse to raid the lauder and distribute its goodies to his friends, the people on Wall St., before leaving office. I had a similar thought about 9/11, that Bush let it happen (he was warned about its possibility but ignored it) so he‘d have an excuse to invade Iraq.
There is no doubt in my mind that Bush&Co. is responsible for the financial crisis America and the rest of the world is facing today. It is not that they are responsible for everything that caused it or everything that has gone wrong. To be fair, the seeds of its potentiality were sown over many years, prior to Bush. But it is Bush&Co’s philosophy of unfettered markets and lack of oversight and discipline that pushed it over the top. What compounded the crisis further were Bush’s tax cuts, while simultaneously having a war that dangerously ballooned the deficit. It was all unsustainable. Bush&Co. also conveniently neglected, out of ideological zealousness, the rules and regulations that had developed over years to protect capitalism from its worst excesses. Elliot Spitzer, the former attorney general and governor of New York State, recently wrote an article in The Post on exactly that point. As state attorney general he and the other 49 US state attorney generals wanted to enforce laws to stop the predatory lending practices that were fueled the housing bubble and creating the subprime debacle, which eventually cause the financial crisis. However, they were blocked by Bush&Co. with a little know federal law, from the Civil War era, that was designed for the purpose of blocking states from acting on their own. And this, from a conservative administration that once said it would adhere to the Constitution and not interfere with state rights.
I am surprised that I haven’t heard any conspiracy theories about the financial crisis like those made after 9/11. If I was a conspiracy theorist I might thing Bush&Co created the crisis on purpose, to spread it around the world in order to bring the world to heal and under its influence again because for years America had been losing ground as the financial hub of the world. Until London has been gaining as a money center and much of the world, due to globalization, was bypassing New York as a financial deal maker. I’m thinking that Bush&Co. was also concerned about China and the rich oil producing states, awash in American dollars, that they would use those dollars as a weapon to destabilize and diminish American’s position it the world. My conspiracy mind is thinking that Bush&Co. wanted to preempt those forces that were nibbling at America’s financial prowess by creating a financial contagion, which would leave the rest of the world at the mercy of US and its bailout cure.
There are always unintended consequences, as Margaret Thatcher once pointed out. The unintended consequence Bush&Co. didn’t foresee is that with its financial bailout it was going against its own philosophy, its ideological practice of none interference and leaving markets to their own devises. And all this due to the fact that it acted recklessly and incompetently in economic matters earlier. And with its solutions it fell into the trap of employing the socialistic tactics it abhorred to help resolve the crisis and the contagion it created. Also, in acting this way, in a socialistic manner, with government intervention, America was now moving more in line with the rest of the world, something that sends shudders up the spine of conservatives like George Will. Furthermore, because of this economic crisis Bush&Co. lost political power – the White House, Congress, and demoralized its own Republican Party.
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