Digging A Hole: Why America is Doomed!

Digging A Hole - Review Of Kevin Phillips' "Bad Money" On Peak Oil, End Of US Empire

Bad Money is a short book by a practiced artist who specializes in identifying the defining trends of American life. Here Kevin Phillips takes on financial practice in the age of Robert Rubin, Henry Paulson, and the global rule of Goldman, Sachs. It’s not meant to be pretty, and it isn’t.

Phillips argues that financial recklessness, combined with peak oil and the rise of Asian economic power, will doom—has already doomed—American world leadership and our standard of living, which depend on the value of the dollar. The leading edge of collapse, in the form of the subprime mortgage and banking crises, is already on us, and the consequences will make future imperial adventures untenable, in Iraq and elsewhere.

The problem begins with private debt. According to a chart early in the book, total private credit market debt was nearly constant, as a share of national income (measured as GDP), from the end of World War II until the rise of Reagan. It then started growing, passing the 1929 peak in the early part of the 21st century and continuing upward to well over three times GDP by 2006—more than double the value of the golden years. Most of that was mortgage debt. And a vast share in 2005 and 2006 was subprime mortgage debt: ticking financial bombs, carefully packaged and marketed to pension funds, hedge funds, sovereign wealth funds, and gullible foreigners.

Phillips correctly notes the roles of former Federal Reserve Chairman Paul Volcker’s radical high-interest policy and of financial deregulation in starting us down this road. He might have said more about Reagan’s tax policy. “Supply-side economics” gave corporate chiefs huge incentives to divert retained earnings, until then the mainstay of business investment, into executive pay. Alan Greenspan’s 1983 Social Security “reform” squeezed workers by raising the payroll tax. And then came the 1986 Tax Reform Act, which for political reasons left mortgage interest as the only type that could be deducted. This created a huge incentive to expand home ownership, and so to financialize the housing sector.
Bad Money


http://www.texasobserver.org/article.php?aid=2762

http://www.alternet.org/story/81652/


If America Declines, Don't Expect Anyone to Talk About It
By Kevin Phillips, Viking Press. Posted April 8, 2008.


(Well, I'm sure that someone will talk about it)


Is our political system too far gone to even discuss the predicaments of the volatile dollar, run-amok debt and Middle East disasters?


The following is an excerpt from Kevin Phillips' newly-released book, "Bad Money" (Viking, 2008).

Rarely in U.S. history has a president, especially a two-term president, been so unpopular at a time when the Congress, captured in the midterm elections by the opposition, is held in no greater regard. In such a case, the norm is for the two to fight, with one side gaining the edge. But that has not been true of George W. Bush and the Democratic Congress elected by running against him in 2006.
The two sides have gone after each other in a fashion, but more often they have simply talked past each other to their separate party constituencies, repeating familiar commitments to keep the true believers on each side somewhat more contented than the unimpressed independents -- those who bulk so large in the 60 to 70 percent of voters convinced that the country is on the wrong track. Most office holders on both sides seem to rest easier if everyone stays away from uncomfortable themes, even ones in the headlines, like costly U.S. overreach in the Middle East; the reckless expansion of private debt, as well as the federal budget deficit variety; the new economic (and political) dominance of the financial sector; and the mounting probability that the nation will have to choose between desirable energy supplies and global warming measures. After all, what you can sidestep today might go away tomorrow.

True, the public is not impressed -- "no guts" and "living in a dream world" are frequently heard descriptions of politicians. However, most big party contributors tend to donate based on established relationships and sympathies or on nonideological desire for access, not on philosophical engagement. No parallel to the simultaneous public distaste for a president and his opposition Congress comes to mind, but then modern polling goes back only to the 1930s. Let me stipulate: despite the obvious salience of predicaments like oil, climate, the volatile dollar, run-amok debt and credit, the housing bubble, and imperial overinvolvement in the Middle East, I would be the last to say that any more than 5 to 10 percent of the electorate would favor a 2008 debate over American decline. Average voters do not.

In these matters, history does not merely urge caution; it demands skepticism -- and about both public attention and likely governmental achievement. It is necessary to consider two other symptoms of weak, even failed U.S. politics: the entrenchment in Washington of a staggering array of interest groups, which has engendered a soulless political dynamic of perpetually raising and dispersing campaign funds; and the further, bipartisan trend toward what can only be called a politics of inheritance and dynasty.

Money politics and entrenched interests

The English-speaking peoples, when filling in new lands, had a certain naviete about the power of entrenched interests and how these could be subdued by locating a political capital in a remote federal preserve far from the existing centers of (corrupting) urbanity and wealth. The capitals were thus located in backwaters at a time when geography trumped media (Washington, D.C., Ottawa, and Canberra); but today, those names have become shorthand in their respective electorates for (1) metropolitan areas with strikingly high (and recession-resistant) per capita incomes; and (2) hothouses of seething interest-group concentration where elected representatives, shedding whatever grassroots fealty they may once have possessed, often train to retire after ten or twelve years to triple or even quintuple their salaries by becoming lobbyists.

As an aspiring theorist four decades ago, I developed a belief that the realignments seen in U.S. presidential politics every generation or so had an (idealized) cleaning-up component. The victors, with a mandate of sorts from an annoyed electorate rearranged in new party coalitions, came to the capital city and purged it of the used-up elites of the crowd that had just been voted out. Some of that occurred after Thomas Jefferson's election in 1800, Andrew Jackson's in 1828, Abraham Lincoln's in 1860, and Franklin D. Roosevelt's in 1932.
f America Declines, Don't Expect Anyone to Talk About It


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http://www.redstate.com/blogs/txpoet/2008/may/12/why_america_is_doomed_unless_we_change_part_2

Why America is Doomed! (Unless We Change) [Part 2]


First read: Why America is Doomed! (Unless We Change) [Part 1]

Political parties now adjust their platforms according to the "electable" candidate rather than requiring a potential candidate conform to the desires of the party majority. Principals be damned it is the power that matters. For without the power how could politicians get rich?

There is a famous quote, "The love of money is the root of all evil." Money itself is neither good nor bad it is what you do to get it and what use you make of it after you have it.

Too many American companies, corporations and people have forgotten the lessons of World War II. During WWII this country pulled together and sacrificed for the good of the Country. Industries stepped up to produce the necessary arms, tools, and supplies needed for the war effort. They didn't do it to increase the profit margin. Most didn't try to gouge the Government. They did it to help defend the free world.

Today we have companies that jack up their prices and costs just because they think the Government can "afford it". These same companies are selling to hostile nations just for more profit. Oil profiteers are creating bidding wars on the spot market to drive up the cost oil. They don't care about this Country just their profit margins and how much money they can sock away in their off-shore accounts.

I am reminded of an old Cherokee story…

A Cherokee grandfather talking to his young grandson tells the boy he has two wolves inside of him struggling with each other. The first is the wolf of peace, love and kindness. The other wolf is fear, greed and hatred. "Which wolf will win, grandfather?" asks the young boy. "Whichever one I feed," is the reply.

America's economic plan for the future must be long term. It also must incorporate certain new rules for doing business with our Government.

Certain businesses and industries are vital during time of crisis and war. Other countries realize this and have taken steps to insure cooperation not competition from these businesses. In South Korea, as an example, the government has partnered with national defense businesses. These companies and industries can convert within a matter of days from producing civilian goods to producing the supplies needed in times of national defense. Examples are automobile companies that can make jeeps and other military vehicle, a silverware factory that can be converted to making rifles, and pharmaceutical companies that can make emergency medical supplies.

These national defense companies agree to do this for several reasons. One reason is patriotism; another reason is the Government requires it for all companies bidding on government contracts. These companies practice these changeovers. Industry and government working together for the good of the Nation instead of for a larger profit margin during time of crisis, what an amazing concept!

Currently this country is mortgaged to the hilt to other nations. China is the prime example. Most of this is due to trade imbalance. In the past Americans were the originators of new products, then we would build them, but today we create, other countries build, exploit, reverse engineer, steal and profit from our creations. Manufacturing is done offshore to raise profit margins. At what point is a profit margin more important than National Security? More important than product safety? More important than preserving this Nation for future generations?
It is estimated that one in ten people in the US are employed by a government entity. [US Census Bureau] Data from 2004 shows that tax revenue was $9377 per taxpayer. Do some quick math. If 10% of the people are working for the government then multiplying nine (9) times the average taxpayer's tax bill is $84,393. After paying personnel costs there isn't much left over. Yes I know there are other revenue streams this is just to put things in perspective. Government is too big and it needs to be reduced in size.

The question is where are the new jobs going to come from? We no longer teach useful skills in our education system, civics, shop, home economics, the arts and in some cases all vocational training has been deleted from the curriculums to "standardize" learning, but there is still plenty of time to teach tolerance for homosexuals, intolerance for Christianity, political correctness, Islam, dead languages (Nahuatl), educational programs "approved" and paid for by foreign nations, and sports.

I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crises. The great point is to bring them the real facts. -Abraham Lincoln


You can please some of the people all of the time and all of the people some of the time, but you can't please all of the people all of the time. -John Lydgate

Earth provides enough to satisfy every man's need, but not every man's greed. -Mahatma Gandhi
http://www.redstate.com/blogs/txpoet/2008/may/12/why_america_is_doomed_unless_we_change_part_2

In his little book, no doubt Mr Philips outlined in detail how we can cure our balance of payments problem.

Possibly somebody could give us a synopsis of his proposals?

Troke said:

In his little book, no doubt Mr Philips outlined in detail how we can cure our balance of payments problem.

Possibly somebody could give us a synopsis of his proposals?

Click to expand...

Troke, I had a long conversation with an electrical engineer from Warren, Michigan today. He rattled off a list of facts that will stun the ordinary person.
Here's what he said.

Gasoline in Poland is $12.50 per gallon....most ride bikes, or use mass
transit if available. He claims that gasoline will be $6.00 per gallon
or higher by next March.

The hourly wage of an electrical engineer in India is $6.00 per hour.
Little or no fringe benefits. That's with 10-12 hour days, few holidays.

An electrical engineer in Mexico makes a bit less than his Indian
counterpart. An assembly line worker makes about $2.00 or so
an hour...according to him.

GM only makes money on its large cars..........an average of $400 per
vehicle. It loses money on its small cars..He said that working in a
dealership is a hazardous occupation, especially in the shop. He
claims that there are many cancer causing chemicals floating around
in the air.....


Big oil encouraged large car production in the U.S......they never
wanted the big three to produce a fuel efficient vehicle.

TPTB want the standard of living in the U.S. to drop as low as some
third world countries......they also want fuel prices to be as high
as those in Europe.

He also reiterated that an electrical engineer will not find work here
in the U.S. at the present time. If he were to go to India, he will
find work, albeit at a substantially lower wage.

He also said that a college education at this point in time is a waste
of money.

He claims that the Mexicans know how to share resources, such as housing...
some even share jobs. They can live on very little money, and still survive.
He claims that the Americans are too expensive in every respect.



That's what he said.....I can't verify the validity of anything he's said.....but the guy is very smart, and seems to know his beans.

"...Big oil encouraged large car production in the U.S......they never wanted the big three to produce a fuel efficient vehicle..."

And the auto industry could not pay UAW wages on small cars. Couldn't do it. So before small cars could be built in this country, the UAW had to be destroyed. And they were. No UAW in foreign car plants.

That will change under Obama when the new labor legislation goes through.

Too bad.

Good imput Dr. I notice on TOL your are a congressman. I assume Asian. I am trying to figure who your are. Do economical experts get elected? You seem to have too much substance to be in politics. Spend more time here.

We'll all be trimmer soon enough! Bikes and Bike Trailers!

Dr.F: $6 is a mere booger flick away at this rate of acceleration.

I would not be surprised if we see $five by autumn and $six by winter.

At that point the pain level will be amazing -- I'm not sure what I mean by that, so take it as a ran-dumb comment.

I don't see the argument about how other places fuel prices we for us. As stated in another thread: Europe's countries are minuscule compared to the USA.

They have great public transportation even to the far burbs, we got boopkis or worse.

In s.fla on weekdays you will wait 90 minutes for the next bus or 2hrs or more on the weekend if there is service!