Thursday, April 28, 2011

Toasting the (Mad) Tea Party

Sorry for neglecting this blog for sooooo long. But I've got an excuse, because I've been busy with more "pressing" commitments, as the saying goes. But what could be more pressing (or amusing) than the coming debate over the national debt ceiling? Way back in Feb. I wrote as follows:
The Tea Party is toast. That's my prediction. What a huge laugh. The oligarchs pulling their strings convinced them "big government" is the problem, so they bought that line and are now intent on bringing "big government" down. And they'll be given a great opportunity very soon, when it's necessary to raise the limit on the national debt.
Well that day (D day!) is well nigh upon us. And the hand wringing has begun in earnest. Witness former Clinton Treasury Secy. Robert Reich, whose blog I can't resist quoting. The blaring headline reads: Extortion Politics: Why Won’t American Business Stop the GOP From Threatening to Blow Up The Economy?
As the government approaches its borrowing limit of $14.3 trillion, Republicans are seeking political advantage over what conditions should be attached to raising that limit. This is a scandal — or should be. Raising the debt limit shouldn’t be subject to party politics. Economic extortion should be out of bounds.
Actually I shouldn't be mocking Reich, because I agree with him almost all the time, he's one of the good guys, I admire him and I'd probably vote for him, if he chose to run for something -- anything. But on this matter, he's being much too serious. He just doesn't get how funny it is.
Not only would the government be unable to issue Social Security or Medicare checks but the United States couldn’t pay interest on its current debt. We’d go into default. The full faith and credit of the United States would be in jeopardy. Treasury bonds would go into free fall. Interest rates would skyrocket. We, and most of the rest of the world, would fall into financial chaos.
Ta da ta da, blah blah. So WHAT????? First of all, financial chaos isn't the same as real chaos. Real chaos is what is now happening in Egypt, Libya, Tunisia, Yemen, Bahrain, Syria, and is on the verge of descending on the rest of the inegalitarian world like a plague. Maybe a good plague, let's hope -- but chaos nevertheless. On the other hand, financial chaos, can, like greed, be "a good thing," to quote the honorable Gordon Gekko.

I once devised a test to tell how "hip" somebody is. It's simple. You just ask them: "are you hip?" If they simply say "yes," or if they simply say "no," then they are definitely hip. Hand them a Tootsie Roll and move on. But if they start whining about "how do you really know what 'hip' means," or "how can you possibly say whether someone is 'hip' or not?" or "sorry but I refuse to participate in such a meaningless exercise," etc., then they are DEFINITELY not hip and you can forget about them, they are useless. Sorry, Robert, but you are not hip. Not even close. Maybe it doesn't really matter, but . . .

For one thing, what is at stake here is NOT the future of the United States or the World, or the welfare of ordinary people, or civilization as we know it, but the future of Capitalism, more specifically, so-called "free market Capitalism." If the debt limit weren't raised and the US Government actually went into default, then we'd be kissing free market Capitalism (with a capital capital) goodbye. Which is the great irony here, because the Tea Party sees itself as Capitalism with a capital capital for sure. And what they would be voting for would not be Capitalism (with a capital whatever) but: SOCIALISM. (With EVERY letter capitaled.) Because once the "public sector" goes under (which is what will happen) there will be no alternative but for "big governments" all over the world to nationalize everything and institute planned economies everywhere -- whether they want to or not!

I wouldn't be picking on Reich at all if it weren't for the following bit:
The biggest surprise is the silence of American business and Wall Street. They have as much if not more to lose as anyone if this game ends in tragedy. Yet the GOP — which big business and Wall Street fund — insists on playing it.
What's hugely funny here, and what will mark Reich forever in my mind as hopelessly UN-hip, is the hugely naive assumption that American business and Wall Street are remaining silent on this matter. I can guarantee this is NOT the case. By this time, I can assure you that every single Mad Hare and Hatter in the Mad Tea Party is getting an earful from the puppet masters who created them -- and would destroy them in a digital trader's micro-millesecond if they even considered letting the US govt. default on its precious debt. Let the games begin, sez I. And let's hope the Democrats don't cave, because if they are as thoroughly un-hip as Robert Reich, then Capitalism will not only be saved, but it will RULE. And the rest of us will be royally screwed.


  1. Good 2 C yer alive an kickin, but sorry 2 say I think yer all wet here. Yer talkin micro and macro here but they are apples and oranges. I agree the real enemy is capitalism and would like to see a genuine if unradical form of American socialism, but in the meantime 2 many ordinary, decent, hard working, elderly, and disabled/poor citizens would be harmed first and foremost 4 some time 2 come by not raising the debt limit.

    Many points you make don't make sense in the real world. Your wishing 4 a default here seems not 2 well thought out and would 2 much real harm 2 those who could afford it least.

    It is one thing 2 want a better system but another 2 start a revolution 2 create it built upon a foundation of what would mean so much harm 2 so many totally undeserving people in the present and near future. Your positions and rationale is way off here in my opinion and even rather contradictory if not downright irresponsible.

  2. My position isn't important. What's important is the painful fact that we are dealing with a Ponzi scheme, on a scale never before attempted. The bubble that burst in 2008 was a Ponzi scheme. But it was a Ponzi scheme that was TBTF. Too big to fail. So instead of blowing the whistle on it and bursting the bubble, which is usually how you deal with a Ponzi, the decision was made to keep it going. And even more money was poured into it and is still being poured into it and will continue to be poured into it. That's what Quantitative Easing is all about and that's what raising the debt limit is all about.

    Now if you're worried that the debt limit won't be raised, don't. Because the masters of the universe won't permit that. It's in their interest to keep it going so it will be kept going, regardless of what fools like Glen Beck and Rush Limbaugh think they'd like to see.

    The interesting question is: how far can we go before we reach the point that it's no longer possible to sustain the scheme? And the answer is: maybe it can be sustained forever, so long as we can get everyone to agree that it's not really a Ponzi scheme but business as usual. The only enemy of the Ponzi scheme is lack of confidence, so let the con game proceed indefinitely. The old "Emperor's New Clothes" strategy. Only that will work only up to a point and when we reach that point some kid is gonna notice that the Emperor is buck naked and "confidence" will plunge into a huge black hole.

    (continued in next comment)

  3. The good news is that it's only money. And when the bubble really and truly bursts for good, which it will, all the resources that were there before will still be there. Huge amounts of wealth will be destroyed. And yes that will include all those pension plans, Medicare, Soc. Security, people's live savings, yours and mine too. But the farms will still be there, the factories will still be there, the doctors and hospitals will still be there, everything that's really important will still be there.

    What won't be there any longer will be the oligarchs whose fortunes will be destroyed and who will no longer be in a position to rule our universe.

    Think of it as a cancer treatment. The chemotherapy will destroy both the bad cells and the good ones, yes. But when it's over, the bad cells will be gone and the patient can then begin to heal.

    Or think of it as a bloodless revolution. No need for violence because the tyrants will have self destructed and we will be FREE.

    Now of course I'm only a poor poet and not an economist, so what do I know? I'm also an idealist I suppose. A cynical idealist, but an idealist nevertheless. And the future I'm projecting, at least the positive aspect is, admittedly based on an ideal view of the situation. If the politicians don't respond quickly enough, or are too hamstrung by their outmoded ideologies, the reality could be very very messy, I admit. And I do see your point, certainly.

    If there were any other alternative I'd be for it, but I don't see one. There is no good or easy way out of the mess that capitalism has created for all of us. My hope is that once the whole thing collapses, the politicians will wake up and realize that they have no choice but to do what should have been done in 2008: nationalize all the failing institutions, nationalize the overmortgaged properties, take everything over and keep it going in spite of all the dooming and glooming. What was it Roosevelt said? "We have nothing to fear but fear itself."

    But yes I'm probably being naive. The oligarchs may find a way to land on their feet and continue oppressing us and since they won't give a damn whether ordinary people survive it could get really bad and we may end up with a very bloody violent revolution after all -- which is NOT what I would ever advocate.

    But as far as I can see the worst case scenario is the continuation of what is happening now, though most Americans don't yet see it. The young Egypians see it, the Libyans see it, the Syrians see it, the Africans see it. And they are risking their lives to change it. And sooner or later our young people will wake from their gizmo-induced stupor and see it too. Let's hope it isn't too late.

  4. Hi Doc, glad to see you back.
    I believe the oligarchs see it too. Thats probably why they are steadily moving their fortunes abroad to safer havens. They figure when it hits the fan they will be out of here and it will just be us poor shleps left to pick up the pieces.
    I've joined this global movement thing called Transitions.Its supposed to be world wide but I don't know that much about it yet. Their philosophy is plant a garden with your neighbors, buy locally, get off oil and coal consumpion as much as possible and build up a self sustaining supportive neighboring community cause the time will come when that may be all we have. Its sort of a positive slant on what you have been alluding to all along.
    I think the big money woke up from the "American Dream" quite a few years back and started investing their savings elsewhere. The rest of us are still asleep in an Ozzie and Harriet dream. Ashevillekat

  5. Hi Kat, nice hearing from you again. I like the idea of planting a garden and trying to be self-sustaining. It's certainly a healthy response to the madness roiling around us.

    As far as the oligarchs are concerned, however, I don't agree. Because when the bubble bursts it will be a global phenomenon and there will be no save havens anywhere for anyone's money. Or gold either, for that matter, because gold is effectively worthless unless you can exchange it for money.

    They WILL have their real estate, however and they will probably be able to maintain control of at least some of their oil wells, nuclear plants, ranches, luxury hotels, etc. But without a meaningful money supply no one will be able to afford what they have to sell. And when government leaders recover from the shock they'll realize that their only choice will be to nationalize all that stuff.

    The oligarchs will have more to worry about, though, because unless they can find some way to pay their security people, they might find themselves dragged outside by the locals, put up against a wall somewhere, and shot.

  6. I don't think you have thought this out too good in a profit driven health care system if people lose their money, pensions, jobs, and Soc Security and Medicare benefits cease for awhile, why do you think doctors and hospitals would be "there" for anyone?!

  7. Once the bottom drops out of the world economy, Anonymous, then the conditions are going to be completely different from what they are now. Doctors and hospitals have routines through which they do their thing, which is healing and caring for people. If suddenly no one is anymore getting paid then what do you expect them to do? Go home and twiddle their iphones? Sure, there would be a transition, and lots of confusion. But after the dust settled, people would figure out for themselves that money isn't really what life is all about. I'm convinced that, with the proper leadership, they could be convinced to go back to work and that if they do go back to work their basic needs would be met. And if you doubt such a situation is possible, then you need to learn something about socialism.

  8. I am a socialist. Any "ism" though is open 2 many different forms, procedures, operations, guiding principles, and especially different types. I'd like 2 C the kind of American society and system you advocate, but I think you need to learn more about the true state of the current day American medical "industry." I have a lot of direct knowledge of and experience with it, and I'm telling you the immediate human costs of the overnight switchover from what we have now 2 what you wish 4, would mean the death and suffering of millions of people, mainly the poor, aged, and disabled. Most of those who care 4 people's ills are just working people themselves. Most doctors are not millionaires. Most who run and clean and keep up the hospital buildings and complexes are the lowest paid. Are you really naive enough to believe that all of these people are altruists, doing what they do out of the goodness of their hearts? I admire and respect most of what you have written and seem 2 believe, and your detailed arguments for those beliefs are usually right on, but not here.

    You have moved on 2 other topics namely the whole Bin Laden thing, which all stinks 2 high heaven 2 me but your thoughts and reasonings on all of that are well thought out, so far, and I have no complaints. Wishing for a non-raising of the debt just doesn't compute though and I think you've made a weak argument for what the real consequences of it would be 2 the people and classes who could afford such a thing the least among us. Not that we are anywhere close 2 such things actually happening of course because as usual, the dems and reps will of course just cut their deal and so forth.

    So what you are hypothetically speculating on in this regard would never happen anyway. I thank you for your replies and keep up the (mostly) great thinking and writing.

  9. Well, Anonymous, I want you to know that I appreciate what you've written even though we disagree on some points. It helps to have a discussion, which I would rather do anyhow than simply pontificate on my own views. I agree that defaulting on our debt could have very dire consequences, for sure. But continuing on the path we're on is imo not the answer.

    Look, if I asked you whether you agree that the US economy has been a Ponzi scheme for some time I have a feeling you'd agree. And if I argued that the best way to deal with a Ponzi scheme is to end it, I think you'd agree with that also. And that's basically all I'm saying. It's a Ponzi scheme and we have to end it. It's a mistake to keep feeding more money into it, especially since this is money we don't have. In financial terms it's called "leverage." We are using leverage (and also in effect printing money) to finance a national Ponzi scheme, which is sick.

    When THAT bubble bursts, it will be worse than a US default, because if we know we are about to default we can take steps to mitigate its effects, whereas if we wait for a total market collapse, it will be sudden and people will suddenly be left with nothing, which is the situation you've just described.

    What I would like to see happen is a planned default, in which the govt. nationalizes the financial industry, the health insurance industry, etc. If it's done intelligently, then the ill effects can be minimized. If we simply wait and hope for the best, we'll be unprepared and the worst, as I see it, is inevitable.

  10. Yes, that would be the answer. I like your scenario much better than the one that keeps doggin me. Thats one reason I keep reading your blog for a ray of hope.
    Have you ever seen the creator of a Ponzi scheme admit his guilt and call a halt to it? Usually it stops when they get caught. I hope China doesn't catch us. I'm just sayin.... Ashevillekat


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