Stop Me Before I Vote Again

... outsourcing white-collar jobs to low-wage countries such as India has become a global fact of life - and America must learn to live with it.... Baucus said a majority of fellow Senate Democrats agreed with him, despite the party's longtime opposition to American companies moving jobs overseas.... "But the world is flat and we must work harder to better retrain our people."

"Bill Clinton pressed on [in pursuit of the NAFTA], growing more rather than less committed as the days passed. Abandoned by two of the three top Democratic leaders in the House, opposed by usually reliable Democrats in the trade unions and by some important leaders of minority groups and environmental organizations, he kept shoving more and more chips into the pot on an issue that few Americans really understood... It was the most important achievement of his Presidency... Mr. Clinton retreated early on Bosnia, on Haiti, on homosexuals in the military, on important elements of his economic plan; he seemed ready to compromise on all but the most basic provisions of his health-care reforms. Critics started asking whether he had a bottom line on anything. On the trade accord, he did, and that question won't be asked much for a while [after] the President's smashing success...free trade would not be quite so free as it might have been, but more walls came down this week than went up...at least Mr. Clinton has gained credibility, through his tenacity on the trade pact, that will help him in the months ahead. 'This is a great victory,' said Robert S. Strauss, the longtime Democratic power broker."

It amazes me how throwing an additional Opus Dei mama's boy onto the supreme bench gets accorded the attentions and hubbub of -- well, not the American Idol finalists, but at least a Wimbledon final, or the execution of a serial killer; but the Senate confirming the next fed chair -- a man who will arguably have the means within reach of his sole will to trigger world wide financial Armaggedon -- what's he get?

The pinky-up tea-cup treatment, that's what.

I guess it's just another grim testament to just how far the donkeys' 40-year shit-slide has taken them.

To my knowledge not a single brave or foolish spirit among the 45-odd Senate Democrats saw fit to even threaten to pull a Kerryesque fribbleous "Mr Smith" type chatter-stall, to protest the steamroller confirmation of Princeton's own Ben Bernanke.

"Diss Ben? Say what? Come on, man -- whats there to get hupped about?"

Well I'll simply start by saying 'twas not always so. There were days of yore when a dedicated bankers-boy rate-lifter and wage-cruncher like gentle Ben would have been bounced from pillar to post -- rhetorically of course -- by the senior Senator from the sovereign State of Stentoria.

Soon i'll post more on this freak of politics: the perpetual "all quiet on the Fed front," this preternatural outrage, this shameless sitzkrieg.

Dear Lord, where oh where, among all these long-eared butt-kissing, wall-street cell bitches are the righteous bellows of a people's tribune?

He notices that gentle Ben, our new Fed chair warmer, loves the word "transparency." To date that has translated in reality to just: "stating explicitly the numerical inflation rate... consistent with the goal of long-term price stability"

As Ralph points out that's common practice... in Europe. But Ralph takes the transparency ball himself and runs as far as he can with it. (Remember, he's a lawyer, not, like me, an attack trained political economist.) So how far does he get?

Well here: Let's "democratize Federal Reserve transparency." He gives some self-described "baby steps" towards that end -- a seven point program:

1. Regular open press conferences by the Chairman.
2. Adhere to the Budget Act which requires the submission of a formal annual budget subject to review by OMB and the Congress.
3. Require congressional appropriations for all Federal Reserve activities.
4. Allow the early release of Minutes of Federal Open Market Committee meetings .
5. Hold open meetings on all issues not involving monetary policy.
6. Require full audits by the Government Accountability Office (GAO)
7. Support legislation to prohibit commercial bank officials from serving on the boards of the 12 Federal Reserve District Banks.

Point 7 is splendid for obvious fox-in-henhouse reasons. Points one four and five are at best quixotic. Two and six would be great if the Fed was just spending money, not controlling the credit system and triggering recessions when wanted, neither of which costs anymore than falling asleep would. That leaves number three which I'll repeat:

3. Require congressional appropriations for all Federal Reserve activities.

Start with a generous tax cut upfront, of course. Then apply the tax. Do a rolling adjustment. This is one program with a long enough flight path to allow erring on the side of an overcut to begin with.

I'm referring of course to the Democratic members of the senate banking committee. Not a soul among 'em opposed either of the latest pair of hapless banker gumshoes Bush hopes to see join gentle Ben's Fed board.

Not much of a surprise -- they tossed nothing but cream puffs at Bernanke himself. If I'd been there I'd ask gentle Ben one question -- before storming out:

"Mister chairman, we know you love the idea of transparency. Well then, why this phoney to-do about posting an explicit inflation target -- core or otherwise? Why not put your intentions right out there so we all can see 'em? Go for the golden bell directly -- proclaim a flat-out wage-rate target. That's what it's really all about -- isn't it?"

Here's the donkey deadwood nine:

• Paul S. Sarbanes (D-MD)
• Christopher J. Dodd (D-CT)
• Tim Johnson (D-SD)
• Jack Reed (D-RI)
• Charles E. Schumer (D-NY)
• Evan Bayh (D-IN)
• Thomas R Carper (D-DE)
• Debbie Stabenow (D-MI)
• Robert Menendez (D-NJ)

His oldest, Joe Jr. -- well we can X him out quick. He was a spoiled, headstrong bully, and a petrified father-cowed sleaze inside, who blew himself up trying to keep ahead of younger brother Jack.

Jack himself probably got almost everything he ever wanted out of life, and then made an even more timely exit than either Lenin or Elvis.

Not so, alas, brother Bobby -- America's first ever New Democrat. Nope, that's a guy we all needed to see more of. Maybe watching him mangle his way through the rest of the high 60's and early 70's, we might have learned faster and deeper what a swindle this whole tight-assed, open-minded, challenge-cup, neo-liberal meritocracy really is.

Maybe we would have killed it off long before we got ourselves into the likes of the Clinton menage.

But back to Ted. As the baby of the brood, Ted got to be more himself then any of the others -- and putting interrupted false promises aside, I think he's actually achieved at least as much, and certainly lost far far more.

So one shakes the knowing head some, upon reading the following in this morning's Globe:

US Senator Edward M. Kennedy plans to a unveil a sweeping economic proposal to improve US competitiveness and make globalization a force of prosperity for American workers.

'To help America embrace the competitive challenges we face we must invest in promising new technologies and high-growth industries that will lead to the jobs of the future.'

Did you ever see a picture of the right hand Rocky M put into Jersey Joe's jaw to gain the heavyweight title? "He'll never get back up from that one...."

Ted's taken more then his share of knockdowns, but this is really too punchy for words. He calls it the "Right Track Act," and it's a list of

measures that includes investing in high-technology industries, lifelong education for US workers, and....

...gives corporate tax breaks for investing in nanotechnology.

Kennedy: "America is in another period of challenge." Sadly note this upside-down gesture tacked on to keep up with the Schumers: "to ensure US workers compete on a level playing field," Ted wants presidential powers "to impose tariffs on the goods of countries that unfairly underprice their products through currency manipulations."

Oh, and there's also something about Fed money to head better high tech teachers toward bad schools.

Ted, Ted, Ted -- you need a crystal resting place... soon.

"I won't vote for anyone who won't endorse re-regulating energy prices."

Nothing more bespeaks the heinous degrdation of donkery than a quick contrast of donk reaction to energy price gouging in '74 vs. '05.

Here is Paul Craig Roberts, former Wall Street Journal voodoo hack, now anti-bushwhack libertarian enragé

"The brutal truth is that America's responsibility is extreme. We have destroyed a country and created political chaos for no reason whatsoever"

For the AFL-CIO the challenge is to break with the Democratic Party elite without splitting the party, as that could hand victory to Republicans, whose version of the box is even more extreme.

Now this is very odd talk indeed -- after the bit about "the challenge is to break with the Democratic Party elite" we get the old wheeze about the "even more extreme" Republicans.

What horrendous bull twitter. Speaking as an attack-trained economist, the coin's worth of difference here between Clintonia and Bushington, as far as labor is concerned, ain't even near worth George Wallace's 1968 Bretton Woods gold-standard dime.

Pretty wonderful, huh? Since that sad day in Weehawken that name has stood for everything brightly hideous, well-heeled, and smoothly crooked in our country. Now donk bond wizard "Princeton Bob" Rubin has it over the door of his meme shop.

Marvel of marvels -- truth in labeling, for once. If my stomach can stand it I will soon have more tales to tell about this house of horrors.

Watch a few donk phoneys split a lance over this one.

We can thank petro-dereg mania -- started by ole Jimmy Carter -- for the naked lunch hog oilers feast on today.

Here's my favorite case: Clinton I believe might have altered the course of the donk parade, if in early '93 he'd stumped for a bottom-up payroll tax cut. I believe not only would he have gotten it, but he might have re-labeled the donkery for a generation as the working stiffs party, and without triangulating a damn thing.

But as he's mentioned many times since, the very notion of a working family tax break was ruled out by Wall Street Bob Rubin -- from day one.

So we got instead... that's swell but don't tell, and Hillary's health folly. And so the '94 housecleaning was a lock.

When [Clinton] was running for office in 1992, he wasn't talking about "workers" ... he talked constantly about the "middle class" (whatever it is that is supposed to mean).

According to the made-over DLC crowd of which the Clintons are charter members, the working class is a shrinking constituency -- no longer, by far, the powerhouse mass that Truman tooted his blandishments at in '48, to such miraculous effect.

Nope, according to the brain trust that does the thinking for the likes of Rahm "Lex Luthor" Emanuel and cherry-cherry Kerry, appeal to the toiler class and its economic interests ... and you lose.

Par exemple -- read "The Trouble with Class Interest Populism" on the website of the Fromsphere planetoid the Progressive Policy Institute.

The upshot -- the Demo poor and working-class base of New Deal fame is now 25% of the population, and falling.

More to come on this subject.

Q: When is progress not progressive, and reform not part of a reformation?
A: When you're only streamlining the death machine.

Recall that device in Kafka's penal colony -- if you produce a microprocessor-controlled Mark II, is that progress? Or is it progress if you reform the post-torture procedures by applying quick-healing unguents to the scrimshaw?

To me, this is what publicly-funded citizen "skill" upgrading amounts to. Since they can't control the compensation, any increased skill supply only lowers the compensation for the skill. How this settles out will vary some from sector to sector, but a fair chunk will end up as increased corporate earnings -- and to complete the loop, we jobsters pay for this passthrough to the profiteers with our payroll taxes.

Here's a typical post.

It "updates" one stalled piece of the "new jobs rights movement." Seeing how 1/3 of the job force contends "sure... ya... a union 'round here would be... nice."

But there isn't one ... of course... nor likely to be one anytime soon, unless something big blows the present corporate skull-riggary sky high.

This bill becoming law -- at least by itself -- could hardly be something big, though at any rate it could add some due process facilitation.

And yet as minor a reform as it would be, the bill can't even get itself out of committee. There are plenty of reps in both parties unwilling to vote against "jobholder liberation," so bottled up it must remain till next November -- or Kingdom Come?

George is still alive, at least as much as he ever was, and recently penned an op-ed in the LA Times. George may be very big on acid, abortion and amnesty, but he's no friend of labor. Maybe labor always knew that.

George thinks "more" is not the answer for wage earners here in America -- times have changed. Globality and all that leads this ex-bomber pilot, ex come-home-America candidate to proclaim

I believe we should allow businesses to pay employees based on their skill level. I also believe we should supplement the wages of those who earn the least.

Another way to benefit workers financially is the earned income tax credit.

According to the ex-senator from Mount Rushmore, this approach

has the virtue of being supported by a progressive tax system.

Liberals must never abandon their core principles of justice and equality. But union leaders who still see American businesses as the enemy must update that vision.

And who are these these biz donk hacks that tried their damnedest to remove this blot on America's tax-free wealth zone?

• Max "Bronco" Baucus... of course
• The Nelson brothers, Ben and Bill
• The Belle Starr of the senate, blushless Blanche Lincoln

Our economic system is called neoliberalism or the Washington Consensus... which is really the latest iteration of predator capitalism but on a global scale. It is a bipartisan effort. Both parties are dedicated to this notion, developed after the end of the cold war, of the American elite’s domination the world.

Whether it is democrats through economic imperialism or republicans through military imperialism, both are expressions of American elites out of control to the complete detriment of the working class not just in the world but within our own borders.

NAFTA was the beginning and has been a template for much of what has followed. Bush I started it and Clinton finished it. It fundamentally changed the capital/labor equilibrium and 100 years of social and “labor” progress has been destroyed or is being destroyed.

It is free movement and protection for goods and money but no protection for workers or environment. No concern or benefit for ordinary people whatsoever, the people at the top benefit and everyone else pays.

Clinton sold out the democratic constituency. The people who lost were the unionized industrial sector and environmentalists. The party went down in the next ('94) election and has never recovered. The objectives of the Democratic Party are not working class but rather the class system that has developed with globalization. The democrats and republicans are working for the same people. Nothing proves that better than GWOT.

What I am trying to say is that a real “prog” who doesn’t think the dems are the root of the problem is a dem who has either secured a paycheck in the realm or has been put to sleep by the MSM. I suggest you ask for your pay in Euros and sleep lightly.

This is a great blog, welcome existential relief from metastasizing liberal delusions.

Regarding the topic before us:

Too many misleading simplifications on this vital subject to go unchecked here.

Neo-liberal globalization predates the fall of the Berlin Wall (although the demise of really existing socialism injected it with some serious juice, ideologically and otherwise) but it postdates 1944’s Bretton Woods conference (which, in fact, was the mere ratification of international institutional designs already cooked up behind the scenes by the US Treasury Department and Lord Keynes, with the latter playing a decidedly subordinate role, given British war debts to Wall Street). It basically arrives on the scene in the 1970’s, when Keynesian welfare statism in the OECD world and national developmentalist models in the Global South could no longer deliver the goods, and in this context of stagnant growth – paired with the demise of fixed exchange rates and the boom in unregulated offshore banking – financial accumulation gained ascendance over productive investment (even this is a hopeless vulgarization).

It is not exclusively a project to prolong US primacy (ruling classes everywhere, including places that don’t take orders from Washington DC, have latched on to it to greater or lesser degrees in order to buttress their own privileges), but it is also naive to claim that it doesn’t to some extent bear the US imperial imprint (e.g. IMF-World Bank demands for "transparent corporate governance" always seem to advantage business service firms and investment banks headquartered in lower Manhattan, for some inexplicable reason).

To be sure, the dominant wings and policy elites in both parties embrace it – perhaps the so-called “liberal internationalists” of the Democratic Party most vigorously, Robert Rubin being the purest exemplar – but there are dissident blocs in both parties as well, namely the nativist paleocons on the "right" and the AFL-CIO protectionists on the "left" – neither of whom are exactly savory bedfellows, unfortunately.

Two highly recommended sources of recent vintage on this question, both quite sophisticated yet eminently readable, are David Harvey's A Brief History of Neo-Liberalism and Neil Smith's The Endgame of Globalization.

Anyway, I’ll stop here before my pedantry becomes even more grating.

... Somewhere else on the blog, JS or MJS (one of the initial guys)caught my eye by saying we should insist that any democrat we might support sign a pledge of non-intervention. I quickly replied and called this a day-dream, since intervention is built into the imperial system, which is universal and bi-partisan.

Following on JR's placement of the discussion in the context of labor, why not, instead of asking our representatives to please sponsor a less violent foreign policy, demand that they launch programs to protect American jobs and develop new ones. For starters, reverse all the tax credits that encourage businesses to locate overseas, and provide credits for those that create jobs at home.

Has any democrat recently said anything like this? Not that I know of. Maybe we could trick John Edwards into moving in that direction!

Kevin Phillips observes that American politics oscillates between periods of go-for-broke individualism and free markets, and reactions against the excesses of untrammeled capitalism. Unfortunately, the former far outnumber the latter in our history, there being only two periods where free-wheeling business was reigned in, and social needs were met -- the New Deal, and the earlier so-called Progressive Era.

But maybe we are again at a point where the evils of free market capitalism are laid bare, and a movement can be built around jobs (and health) for the people, not profits for the rich. it would be fun to be part of such a movement, wouldnt it?

The kind of rhetorical chicanery that the Democrats are stooping to now in order to seem progressive on the issue of health in America has reached new heights in disingenuity. Here is an excerpt from the platform of U.S. Senate hopeful, Ben Cardin:

Ben Cardin believes that it is unacceptable and unconscionable that while America is home to the most advanced health care and medical research facilities in the world, more than 47 million Americans have no health insurance. And each year, the cost of health care continues to skyrocket, making it more difficult for employers to offer, and for families to afford, quality health care.

Astute observation, right? So far so good eh? His proposal for resolving this travesty:

[Ben Cardin] Believes we must fight to expand coverage by building on the current employer-based system of health care. By offering small businesses assistance in securing affordable coverage for their workers, we will make it easier for states to enroll eligible children and parents in the Medicaid and the Children’s Health Insurance Program. This will also allow early retirees between ages 55 and 64 to enroll in Medicare at an affordable premium.

Health industry donations to the Cardin campaign? A whopping $225,800. His top contributor.

Anyway, if all that wasn't amusing enough, get a load of this:

Minority groups are disproportionately affected by cancer, stroke, heart disease, diabetes, and other debilitating diseases:

- [Therefore], we must intensify our research efforts to determine both the cause of racial and ethic disparities and how to narrow gaps in health status.

Geeez laweeez...what could be the cause of this disparity?

*sigh*

'My other piece of advice, Copperfield,' said Mr. Micawber, 'you know. Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and - and in short you are for ever floored.'

Pelosi Promises Fiscal Restraint If Democrats Win

Minority Leader Says Democratic-Run House Would Target Deficit

By DAVID ROGERS and SARAH LUECK
July 13, 2006; Page A4

WASHINGTON -- House Minority Leader Nancy Pelosi pledged that if Democrats succeed next year in rolling back President Bush's tax cuts for the wealthiest Americans, the money would be used to reduce the federal deficit -- not for new spending....

The California Democrat anticipates some resistance from within her party, but returned to the theme of fiscal prudence in an interview with The Wall Street Journal. When asked to outline the Democrats' agenda, she listed initiatives that she said wouldn't strain the government's coffers: cutting interest rates on student loans, raising the minimum wage and demanding higher royalties from oil companies.

"Not every single dollar" would go to the Treasury, she said, "but I hope that...we would use the rollback of the tax cuts" to address the deficit since "it is the biggest drain...on the next generation."

The party left needs to throw up a few wildly divisive draft planks, not cultural but of the tax variety. Like a net-worth tax on the one percenters, and a payroll tax cut on SSI.

Nothing new here, of course, but the notion is, let's smoke out the money-changers' party familiars, then let's attack the foreign aid budget -- no more arms tech for anybody. That oughta smoke out some stooges too.

Plank battles like these -- not gay marriage and abortion and gun control -- will get at the real wire-pulling fiends

On another popular topic: forget campaign reform. That's changing the frame, while it's the picture inside that's ugly.

As I mentioned with other words in a comment here -- want to stop big money or Zionic influence? Well -- if you promise to screw 'em they won't donate.

Of course this is an impossible dream, but the point is to force the fiends to answer the musical question, "why the fuck not?"

I suspect most of you have already seen Joe's corporate wiring diagram at Counterpunch. It's sure a smooth set of grooves he's in.

It reminds us how much the nutmeg nutter is not just the mad muppet of Zionia, but also about as near the top of the US chamber-of-horrors honor roll as a donk can get.

One year after labor groups vowed to punish 15 Democrats who joined Republicans in the U.S. Congress to approve a Central American free trade pact, most have easily won their party's nomination to run again....

... 11 of the CAFTA 15 have already won their party's nomination to face a Republican party candidate in the November congressional elections. In most of those party primary races, the CAFTA 15 candidates ran unopposed.

Two of the remaining primary races are in New York, where Rep. Gregory Meeks... is running unopposed and 24-year House veteran Rep. Edolphus Towns... faces two opponents on September 12.

The New York AFL-CIO voted this week not to endorse Meeks and Towns because of their CAFTA vote.

"It basically means we're sitting out the race," said Mario Cilento, communications director for the New York AFL-CIO. "Delegates to the convention felt strongly that a message had to be sent and not take labor support for granted."

... as Democrats hope to take over control of the House from Republicans and as an aspiring presidential class of 2008 becomes more assertive, the Hamilton Project, named after the founding father and onetime Treasury secretary Alexander Hamilton, is arguably [ former Clinton Treasury Secretary and financial Svengali Robert] Rubin's most overt political act since he stepped down from the Treasury in 1999....

Housed in the Brookings Institution, the initiative embraces a number of mainstream economic prescriptions - like the necessity of equitable international trade agreements, the virtues of a balanced budget, and making economic growth more broad-based....

But by addressing issues like the costs to the economy of excessive litigation and regulation, Mr. Rubin intends to make the project a laboratory for the type of pragmatic, ideology-free policies that appeal to the project's Wall Street advisers while also hoping to lure Democratic presidential candidates away from populist economic positions. And with Mr. Rubin and his successor and friend Lawrence H. Summers on board, it will also be a training ground for the next crop of financiers with ambitions to shape policy in a Democratic administration.

They include those who have done so, like Roger C. Altman, the chairman of Evercore and a former deputy Treasury secretary; those who aspire to do so, like Steven Rattner of Quadrangle, the private equity firm; and, perhaps most important, younger Wall Street executives just now flirting with the idea.

It is with this last group of executives, drawn largely from the booming world of hedge funds and private equity, that Mr. Rubin has loomed large as an Obi-Wan Kenobi figure.

In the 1980's he cultivated their early careers as arbitrage traders at Goldman Sachs, and he is now guiding them in the ways of securing influence in Washington.

Eric Mindich, who runs Eton Park, a $5 billion hedge fund, led Goldman's arbitrage desk at the age of 25, and in 1994, at 27, became Goldman's youngest partner ever.... He is also a contributor to Mr. Rubin's favorite senator, Kent Conrad, the Democrat from North Dakota.

Then there is Richard C. Perry, who left Goldman's arbitrage desk in 1988 to form Perry Partners, now an $11 billion hedge fund. And Thomas F. Steyer, the founder of Farallon Capital, a $16 billion hedge fund, who also worked under Mr. Rubin in the 1980's and was an adviser to Senator John Kerry's presidential campaign in 2004.

Sept. 6 (Bloomberg) -- U.S. Senator Charles Schumer is "very serious'' about forcing a vote this month on legislation to place punitive duties on all Chinese imports, his spokesman said.

"We need to see real results on the currency. We need real signs of progress,'' the New York Democrat said today, according to spokesman Eric Schultz."

http://www.bloomberg.com/apps/news?pid=20601080&sid=aZVqDxEMrb2c&refer=asia

Bull goose Democrats continue to think nativist pandering and know-nothing economics will help them, even when the Republicans have locked in that pitch and can offer the full crackpot monty.

Of what do I speak? This:

[puts on wonk cap]

The quick donk New Deal way out would be to treat our jobster homes like the first New Deal treated family farms:

"Friends, these homes are America's backbone -- they produce the nation's most sacred crops" -- i.e. all our corporate job hours, in their rich variety of tasks and rates of compensation. To help, (but still reward the dutiful and thrifty), we could nationalize all residential mortgages up to the the market value of each and every Amerikan house lot, and simultaneously issue a stream of lot equity credits usable against a national George tax on ground rent (i.e. on lot value).

Voila, no more private rack-rating, and of course no more borrowing against lot value, and no more lot price elvis-plate or tulip manias either,

Our clever, constantly revalued George tax will effectively render all lots of zero private value.

Hee hee hee, and I'll control it all through a bank of high-speed computers.

Head start: the Gub already owns a big chunk thru Fanny and Fred

So what's your problem, troops? Don't tell me you saw this somewhere else, cause you ain't. This is pure originality, fellow critters. I want my just accolades, or at least a few quibbles!

My personal rep, blazing progressive Barney Frank (shown above with caped coffin-sleeper Tom Lantos) seems to have turned into a bit of a wet hen in a recent piece in that dashing people's tribune, the American Prostate

Barney tries mad, mad, double-mad dancing on gentle Bobby Reich's head, because in an earlier issue of the same earnest mag, Bobby R bluntly claims the donks, if they regain control of the House this fall, will do exactly what Karl Rove and I say they'll do -- that is, follow their cheap showboat instincts, and grandstand -- as in raise a hullabaloo about Bushco illegality, profiteering, etc., etc. -- you know, just generally play gotcha with the elephant's behind.

This Bobby claims they'll do, instead of helping the beleaguered middle-income jobholdery, which, to sir Bobby, is the one and only true party mission.

Well needless to say, this touches off a string of Frank firecrackers. Some of these just spring from vanity -- how dare anyone presume to instruct the likes of a barnyard B Frank -- but other pops are clearly explosions of authentic kitchen fury. After all, Bobby stepped on a corn here, right? And Barn has to play it up, with all the righteous outrage he can push through that tiny, lipless, side-sloped Buddy Hackett mouth of his. To the contrary, Mister Robert Reich -- Barnz and his liberal donk friends have no intention whatsoever of going after Bushco:

I know of virtually no support for trying to impeach President Bush among House Democrats, because we understand that this would be entirely counterproductive to what we are trying to accomplish both politically and governmentally.

I confess to some personal irritation ... when I am told that ... I should in fact think about beginning to do things that I have been doing."

But here's the blink passage to me. Let me set it up first. Bobby in his piece has said, among his other don't-dos, don't waste time trying to expose "nefarious links" Bushco has to [cue sinister drum roll] Wall Street. Here's the barn hen's cluck on that one:

As for myself, I have consistently said that I want to show that liberal Democrats can be fully supportive of the legitimate functioning of financial intermediaries in a responsible capitalist system, while at the same time protecting the rights of consumers and helping address the problem of growing inequality.... I have never argued that this administration has "nefarious links to Wall Street," and in fact it would be very odd if an administration had no links to Wall Street in these areas."

One is tempted to clown it up, and suggest to Barney that his hand-crafted line may reach a level of ambiguity that is itself manifestly nefarious and paradoxically revealing.

If the tower brute can torture you, then the tower brute will torture you. It's no longer debatable; you may climb the comp pole, but you can't hide. It's here, it's real, it's immediate -- even more than climate change. We live in an era of accelerating job pay blight, and now it's spreading up the compensation pole like Dutch elm disease.

If the 80's was about the jovial de-nutting of the classic New Deal blue collar male, then the 00's are about putting it to Joe and Jane Mortarboard.

But let us rejoice in this prospect of shared immiseration -- today there is no longer any broad willing market for the new-Democratic DLC neoliberal snake oil. Recall its golden era claims: prosperity for the little guy is just a skill enhancement away, and if not one enhancement, then two or at most five. Prosperity for you and more to the point for your young-'uns is within the power of your own strivings to attain. "We all can not only have capital but be capitalists too! Yes, folks, with enough education and training, we all can be our own capitals, a corporation of one selling our services (with a very tidy return on investment) to the highest bidder. Come on! Join the rush to exploit yourselves!"

Well, the returns are in now, and it seems with all this offshoring of professional services, the "human" in "human capital" is starting to sound a lot like the "human" in "human sacrfice."

Here's a real case of don't that just beat all: great Oreo hope Deval Patrick running to be donk governor of the Commonwealth of Mass. (The candidate is shown above, with that great emblem of the Democratic Party, Mike Dukakis, getting ready to cook and eat an entire blue-collar family.)

Talk about a board room whore. Needless to say, however, the AFL-CIO is behind him all the way. But the Killer Coke folks have got the goods on Patrick. I quote:

An Open Letter to Massachusetts Labor Leaders
September 5, 2006

Dear Brothers and Sisters:

Massachusetts AFL-CIO President Robert Haynes has accused me of parachut(ing) in from another state while likely violating campaign finance laws and mislead(ing) people into thinking (I) speak for organized labor.

All of these accusations stem from the fact that Mr. Haynes not only chooses to ignore gubernatorial candidate Deval Patricks blatantly anti-labor record, but resents anyone who tries to remind the voters about it.

Mr. Haynes should realize that a Big Business power broker like Mr. Patrick doesnt deserve any support from unions when running for office. Mr. Patrick has already collected nearly $800,000 in out-of-state contributions parachuted to him from many sources, including contributors who list notorious union-busting law firms like Jackson Lewis and Seyfarth Shaw as their affiliation. About $24,000 came from employees of the Boston law firm Ropes & Gray, which publicly acknowledges that it helps clients with employee discipline, implementation of reductions in force (and)union avoidance. (Incidentally, Mr. Patricks wife, Diane, is a partner in the Labor and Employment Department at Ropes & Gray.)

A closer look at Mr. Patricks past raises many more questions that both voters and labor representatives should be asking. As Texacos Vice President and General Counsel from 1999 to 2001, he was a principal architect of the Texaco-Chevron merger, which enriched a few oil executives but also resulted in the loss of thousands of jobs. When he wasnt helping impede competition and hastening the consolidation of the oil industry, he was Texacos point man on opposing the right of 30,000 poverty-stricken Ecuadorians to sue the company for causing massive damage to peoples health and their environment.

P.S. In line with Comrade Smith's anti-flag campaign, here's the logo from Patrick's Web site:

No ordinary leader indeed. Even for a Democrat, this guy is pretty damn ripe.

My report begins inside deepest academia, staring into a wizard's brew of statistical flapdoodle, full of confidence intervals and r-squares and all that, the work of a prolific Princeton poli sci cone-cap with the oddly folksy name of Larry Bartels. In its own very postivistical way, this paper makes a few very loud claims -- among which, one in particular caught my fancy: Bartels has struck a correlation that might imply a very very sinister Republican plot that fellow Princetonian prof Paul Krugman calls "very mysterious".

Seems there's a relationship between the performance of our national economy and the party in power come prez election time, and this relationship runs back to at least the Truman surprise of 48. And it's a very nasty bit of business too, as its consequences dramatically favor the electoral prospects of the repugs over the jack-assery. Bartels claims some intentional force or forces precisely gooses up any and all prez election year economies if the incumbent party in the White House is repuglickin', and snuffs out any growth if the incumbent party is the donkery. And this up or down swoop in the growth rate is worth a few possible key points up or down for the incumbent party in the vote totals. Bartels states a strong causal relationship "may well exist" between economic performance and voter party preference he even suggests an estimated "at the margin" value for this causal relationship, in the form so many extra vote points per point of higher economic growth rate.

Now I suspect what caught Father Smiff's attention in all this was another observation: in this very same paper Bartels shows that the donks are better at growth induction over all, and better by quite a bit for the little guy -- except in those accursed fourth years of Democratic White House terms, when the donkey suddenly, inexplicably, and inevitably founders. The go-go growth donks, after trotting so nicely for three years, always come up with glanders in the home stretch.

Brother Bartels skates past an important distinction here -- under the two New Dem regimes, Carter's one term and Clinton's first, the results were far less convincing. (Not until Clinton's second term, when he jammed through a huge tax cut for capital gains types (his donor class), I've always suspected he got, as a quid pro quo, Greenspan's braking the unemployment rate floor with three more years of loose credit. This loose credit kept the economy growing, unemployment rate dropping, wages rising, and the middle 60 compressing while also prospering, as they do in most rising economies.) What held for the old donkery of Harry through LBJ does not carry forward with any real demonstable signifigance to the New Dem, New South party era.

But this isn't really Bartels' main point. He's interested in the election-year trick.

Of course the really interesting question is the "how" of it, and this he doesn't address. It would be quite surprising, wouldn't it, if the dems were just not aware of the trick, or at least how to make it work for them too? After all they got Harvards and Stanfords and MIT types on their bench too. So probably it isn't ignorance -- maybe they just can't implement like the repugs can.

I will hazard this: if the pattern is there and is causal, there's one outfit that could surely pull this off: my own favorite White Whale, the Federal Reserve Bank, that independent bastion of the great American scroogery. They could do it, and do it every time.

(CNSNews.com) - Americans will hear a lot about "donut holes" in the days ahead, but it has nothing to do with the nation's obesity "epidemic."

Democrats and some liberal interest groups are furious that the government's new prescription-drug entitlement program forces some senior and disabled citizens to pay the full tab for their own prescription drugs -- beyond a certain dollar amount. They argue that the cost of prescription drugs is still too high."

Story link: http://tinyurl.com/rgxnl

Here's the House vote, with just enough Democrats to make sure it passed, when it could have been defeated.

http://clerk.house.gov/cgi-bin/vote.asp?year=2003&rollnumber=669

And the Senate vote, with -- yes! -- once again enough Democratic votes to tip the scales.

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=108&session=1&vote=00459

This pattern repeats itself over and over. Greedy corporate welfare queens roll out the big perception management guns, get a few shills on board -- AARP, in this case -- and the Democrats provide just enough votes to make sure the very worst things happen. Afterwards, the Democrats who cost everyone so much time, energy and money are welcomed back into the fold, just like nothing happened. Then a bunch of hopefuls run against something that was preventable in the first place.

What makes this particular issue so awful is the predatory use of our elderly brothers and sisters and the clear prior knowledge that this was a terrible thing to do. Several states were forced to delcare emergencies to cover the havoc created by this legislation.

"About 20 states, including California, Illinois, Ohio, Pennsylvania and all of New England, have announced that they will help low-income people by paying drug claims that should have been paid by the federal Medicare program.

"The new federal program is too complicated for many people to understand, and the implementation of the new program by the federal government has been awful," said Gov. Tim Pawlenty of Minnesota, a Republican. On Saturday, he signed an emergency executive order making the state a "payer of last resort" for the out-of-pocket drug costs."

Story link: http://tinyurl.com/mtlpm

With a good degree of success, Larry attempts to unlock the paradox we progs found so prevalent, looking back over the voting behaviour of America's most jobbled palefaces -- i.e. their persistent tendency to prefer candidates of the party of rich man tax cuts, and their patently false promises of abundance for all, over the long-eared supposed party of the common man.

Now of course we hear the line that the fools were voting their values, not their pocketbooks -- as if they bought the costless placedo snake-oil at top dollar, just so long as the Bible said to "follow such men."

But Larry sez "Just wait a second here." Larry's discovered another possibility, dearer to the hearts of Benthamites and liberators and free-traders everywhere, namely: "self interest." Only it's unenlightened self-interest -- the great abiding fear of J S Mill and Gladstone.

Seems if you review the mind-set surveys around the time of the two big tax cuts in '01 and '03, as Larry sez, you'll find in there Homer buying the notion of cutting Mr Burns' taxes, cause Homer figured "there's a little something in it for myself" -- even if, as he seems to know,, it's a very little.

And here's the farce of it: a full 180, taking in all the major knock-ons and other secondary effects like spending cuts, deficit increases, even higher taxes someday -- it all turns the paltry up-front bird-in-the-hand jobblers' share of the tax cut into a long-run net loss, for maybe the whole bottom 80% of American households.

Now as we all recall, this was not the first jobblers' blanket-toss by the Repubs. They'd been at it for 30-plus years at this point. Just how nasty had it gotten, even before, yes before, the '01-'03 bush plutotax cuts?

I like this comparison. Larry points out: In the late Clinton 90's, the top 13 thousand households had pretty close to the same total income as the bottom 20 million households. Don't think Homer didn't kinda know this, dislike it and wish it were otherwise. And yet, instead of a massive rectification of this re configurement, after Bush got appointed and went to reward his base, damned if the Homericans didn't cry "more more more!"

Why? Not because they didn't understand the '01 cut would grossly favor the rich. Hell, 85% even knew it wouldn't do them much good at all. But according to Larry's sifting of the surveys, it was because they didn't "connect all the dots," either because they weren't paying attention, or not thinking beyond step one -- i.e. they were not informed, not "enlightened," and they didn't tie the cut to all its nasty blowbacks for them.

The assumption is that by behaving -- that is,voting -- differently, they might have achieved a different result. But while the Repubs were cutting income taxes, there was a bipartisan raising of payroll taxes. And then, Clinton promised a jobblers tax cut, renegged in '93.

To me it makes sense: when somebody gives you money, take it. Take whatever the bastards give you -- and the donks give you nothing. Especially if you play by the rules, you get nothing but lectures to play by the rules some more.

To my way of thinking, Larry quite nicely gets all the way to Monte Hall's final prize doors, and then chooses the wrong one.

Homer don't trust the donks' long-range promises. He'd rather have the repugs' short-term up-front workin slobs' rebate tip. It may not be much, but it's better then a sermon on the need for the groundlings to get some Higher Ed.

I want the Democrats to return their roots, so to speak-reclaiming their voice as the defender of middle-class Americans on pocketbook issues. And the way I argue Democrats can do this is by speaking forthrightly about the rapidly increasing insecurity of American workers and their families....

Stat: In 1970, US households had ~7% probability of a 50% future drop in income. Fifty per cent! Today, after a pretty relentless climb upwards over the last 35 years, it's now over 16% -- a 16% chance of a total household train wreck. Here's his graph:

Presumably the Democratic "roots" Hacker mentions are to be found somewhere off to the left of this chart.

http://www.ft.com/cms/s/89aac4dc-6777-11db-8ea5-0000779e2340.html:

Yet in many corners of the globe there is growing disillusionment... we see a degree of anxiety about the market system that is unmatched since the fall of the Berlin Wall and probably well before.

Why is there such disillusionment?.... As the great corporate engines of efficiency succeed by using cutting-edge technology with low-cost labour, ordinary, middle-class workers and their employers – whether they live in the American midwest, the Ruhr valley, Latin America or eastern Europe – are left out. This is the essential reason why median family incomes lag far behind productivity growth in the US, why average family incomes in Mexico have barely grown in the 13 years since the North American Free Trade Agreement passed, and why middle-income countries without natural resources struggle to define an area of comparative advantage.

It is this vast group that lacks the capital to benefit from globalisation and is desperately seeking either reassurance or a change in course. Yet without its support it is very doubtful that the existing global economic order can be maintained.

What Larry fails to point out is how the despair of Globalism's "losers" can actually be an advantage. Their opportunities are shrinking, thanks to restricted access to capital, and therefore they can take greater risks. Rational maximization of that potential will save them. His past thinking along those lines remains as valid as ever.

http://www.whirledbank.org/ourwords/summers.html:

DATE: December 12, 1991
TO: Distribution
FR: Lawrence H. Summers
Subject: GEP

'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]...?

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City.

Query 2: Suppose Larry's party does succeed in regaining power, next week or in 2008 -- are we likely to see Larry in government again?

• Put new rules in place to break the link between lobbyists and legislation

• Enact all the recommendations made by the 9/11 commission.

• Raise the federal minimum wage to $7.25 an hour.

• Cut the interest rate on federally supported student loans in half

• Allow the government to negotiate directly with pharmaceutical companies for lower drug prices for Medicare patients.

• Broaden the types of stem cell research allowed with federal funds.

• Impose pay-as-you-go budget rules, requiring that new entitlement spending or tax cuts be offset with entitlement spending cuts or tax hikes.

If the elephants hadn't shit the district six feet deep all the way out to the last lane of the beltway, this feeble stuff wouldn't elect Jesus of Nazareth.

The High Dollar: President Clinton's Unaffordable Tax Cut
By Dean Baker

Everyone knows about George W. Bush's unaffordable tax cuts, the big tax breaks that gave millions to millionaires and billions to billionaires, but few people are aware of the even more unaffordable tax cut from the Clinton administration. That is because President Clinton's tax cut took a somewhat different form: an over-valued dollar....

Clinton did not start his administration with a high dollar policy. Lloyd Bentsen, his first Treasury Secretary, deliberately allowed the dollar to weaken in the first years of the Clinton administration, with the hope of keeping the trade deficit at a manageable level. ...The high dollar policy came into being under Bentsen's replacement, Robert Rubin.

Unfortunately, Baker doesn't really do much serious damage. In fact, his attack reminds me of the Moran gang's drive-by spraying of the Capone luncheon eatery. But read it anyway; stuff on this is so rare in the media, and hey, it's short. Then come back and I'll try to hit what Dean missed.

What, back already? That was quick. Okay. Number one: the high dollar means the strangulation of industrial America. The high finance boys have nothing against factories in the heartland paying living wages, except that this conflicts with the logic of profit maximization.

Number two: forget the 3 trill foreign debt gag. That's overrated. And forget the nonsense about inflation control (translation: wage control). And yes, imports will cost more if the dollar goes to where trade is in balance. But Dean misses the correct focus: this is a systemic problem -- all "north" currencies, all currencies of advanced industrial, soon to be post-industrial nations, are wildly overvalued against the currencies of the "emerging industrial nations." In fact, looked at dynamically, it's the euro zone that right now seems headed for the greatest squeezeout of decent jobs.

At any rate take this to the bank from both Dean and me: the war on good jobs is producing zillions more totally unnecessary "job casualties" 'round the globe than any one "respectable" seems willing to acknowledge. It makes the on going Iraqistani great caliphate suppression look like the Circus Maximus it is.

"With a working family majority in Congress this January, we have a chance to start addressing bread and butter issues."

Just thought you all would like to know the Clintonian-Rubinonian Wall-street-to-my-street hokey-pokey donkery is doing business as the friend of "the working family" once again -- well, maybe not everywhere, and certainly not for everyone, but at least around the union flacks.

After all it is the party that fed, housed, and promoted Hubert Humphrey, the biggest blob of protean bullshit God ever created.

Hey, they're the majority now -- so it follows that the whole flock of congo donk birds will turn as one to cadge dimes for the jobbery, even the blue dogs -- right?

When it comes to the all things to all people department, there's nothing like a jackass.

Here Come the Economic Populists
By LOUIS UCHITELLE

FOR years, the Clinton wing of the Democratic Party, exercising a lock on the party's economic policies, argued that the economy could achieve sustained growth only if markets were allowed to operate unfettered and globally.... the Clinton administration vigorously supported free trade agreements like Nafta .... Over time, this combination - called Rubinomics after the Clinton administration's Treasury secretary, Robert E. Rubin - became the Democratic establishment's accepted model for the future.

Not anymore. With the Democrats having won a majority in Congress, and disquiet over globalization growing, a party faction that has been powerless - the economic populists - is emerging and strongly promoting an alternative to Rubinomics.

We feel we have a stronger voice now in the deliberations of the Democratic Party.

Attention, job nation: don't wait around for the huge gravy wave. Even if the "populists", or at least these old manatees of unionhood, think they're back in the great game. They can't hit their weight. Let the evil bastards up there throw 'em a few big league curve balls and they'll be as hapless as a blind Dutchman. In fact the Times piece gets around to saying pretty much the same thing, by the end:

...[D]espite their relentless criticisms of President Bush's tax cuts, neither the populists nor the Rubinite regulars would try to roll them back now, risking a veto that the Democrats lack the votes to override.

... The threat of a Bush veto affects another piece of the Democratic agenda - an increase in the minimum wage. Both Democratic factions support a bill, to be introduced in January, that would raise the minimum wage to $7.25 an hour from the current $5.15. The increase would come in three steps, spread over more than two years, with the final $7.25 not reached until spring 2009 at the earliest.

That is the same $7.25 that would be effective today if Congress had given its approval when Senator Edward M. Kennedy of Massachusetts first proposed the increase in 2004. Yet Mr. Kennedy is the chief sponsor of the new attempt to raise the minimum, his strategy being that the $7.25, stretched out to 2009, is mild enough to be acceptable to Mr. Bush and many Republicans.

... Representative Maurice D. Hinchey, a Democrat whose New York district includes Kingston and other economically struggling cities, asserts that the federal minimum should be $10 an hour now. Going that high right away is unrealistic, he acknowledged, but in the Congressional debate over the Kennedy proposal, Mr. Hinchey will push to have the $7.25 effective no later than the spring 2008, not 2009.

"If I went out on the street in Kingston," Mr. Hinchey said, "and said to people that the minimum wage is not going up to $7.25 until 2009, they would say to me, 'That is all the Democrats are going to do? Why did I vote for you?' "

Even so, one must say, my my, how big media preceptions can revolve. Wasn't long ago Bobby Rubin was the dreadnought nonpareil of donk economic policy, and now, suddenly, scaley helot serpents spring from the depths!

Ya, ya, I know, we're just being taken on a cruise around the big circle back to nowhere -- but don't it pick up the story some, though?

Read all the way to the end, where he gestures vaguely at the Rangel-Pelosi "waver". Face it, Mark, for us mites of the jobbled weeblery, this new donk majority is nothin but a downhill mood race, a long run to bummerville.

When will these voices raised in decency start screaming "FOUL" at the Dembos for this filthy stowaway act inside the vast hope-tricked hold of the good ship SS Prog-America?

Hey, the party of rubber turkeys like Steny Hoyer and Baucus Maximus has no intention of betraying its corporate trans-nat backers, just 'cause a vast hunk of the electorate would rejoice and maybe even prosper.

The champion of the party's Right is one Peter Orzag, member in good standing of Wall Street empire's fast response team (donk division). He's coming back hard and soft at the same time, at the "neo-pops'" oafish stabs at a people's economic agenda. Before he closes for the beating, of course, up top there's the mandatory Clintonian candy-flavored poison gas blown out at us just to demonstrate "I know and feel your pain" -- you weeble-feeble jerknecked rubes, he adds in an undertone.

That out of the way, soon enough he's down to biz, using this marvelous pivot into attack mode:

[P]olicy makers who genuinely care about American families' well-being may be tempted to pursue measures... that interfere with the workings of the market, [such as] anti-trade protectionism, constraints on hiring and firing, regulatory protections for specific industries, outsourcing restrictions, or requirements that businesses spend a certain percentage of their payroll on health care.

[T]he evidence suggests it will ultimately harm the economy.

[L]eaving or compromising free trade policies [will lead to] monopoly, crony capitalism, and sloth.

Our man here from Rubinonia, having drawn up that horror show, counters with some helpful remedies of the non-market tampering, but of the gubmint tapping, tinkering, and tidying kind -- i.e. compensation schemes -- thicker, softer, gentler, job wreck collision mats -- paid for by Uncle's tax system, which, he adds, by the way, needs a little proggy tuneup.

Sorry, guys and gals... I can write no more about this -- this slop for blind goo goo chuckleheads. Not today, anyway. So i'll just leave you with Orzag's final zing:

Trying to shut down the process of creative destruction creates macroeconomic stagnation.

Some folks sense a bad tilt here: where's the AFL-CIA spokespersonage to give...balance?

Seems this dipsy doodle by madame Pelosi has elements of the Kos-tal artillary engaging in some "cross battery" firing. One side, battery Z:

http://www.dailykos.com/storyonly/2006/12/4/01326/8078

On Wednesday, December 5, freshman representatives will be subjected to indoctrination in the economics of fucking the people who sent you to Washington ... by Robert Rubin.

http://www.dailykos.com/story/2006/12/4/95838/6772

Some folk with an actual knowledge of Nancy Pelosi ... and of how Congressional events are set up and scheduled, have tried to stem the Lord of the Flies-like hate frenzy with fact injections, but the problem is that the left in this country has been so tainted with an unthinkingly reflexive, corrosive cynicism...

One hardly needs to wonder which battery has the heavier guns -- and which will prevail.

http://maxspeak.org/mt/archives/002715.html#more

Now to be clear, I like Nancy Pelosi just fine, I am thrilled that she is Speaker of the House, and I look forward to working with all segments of the party willing to work with me, including the Hamilton Project and the DLC.

As I put up at his site, If Moses can call a golden ass a golden ass -- is that enough? Do Aaron and his acolytes get to continue as usual? Or does Moses... thunder? Does Moses rain down ruination?

http://www.cato.org/pub_display.php?pub_id=6800

Allow me to hazard a few more specific suggestions about what a liberal-libertarian entente on economics might look like.... (zero) farm subsidies and other corporate welfare....

The president of Cato and the executive director of the Sierra Club have come out together in favor of a zero-subsidy energy policy.... A nascent fusionism on these issues already exists; it merely needs encouragement and emphasis....

Tax reform also offers the possibility of win-win bargains....The basic idea is simple: Shift taxes away from things we want more of and onto things we want less of.... Specifically, cut taxes on savings and investment, cut payroll taxes on labor and make up the shortfall with increased taxation of consumption.... And tax everybody's energy consumption.

...Gore has proposed a straight-up swap of payroll taxes for carbon taxes, while Harvard economist Greg Mankiw has been pushing for an increase in the gasoline tax.

Entitlement reform is probably the most difficult problem facing would-be fusionists.... Here, libertarians' core commitments to personal responsibility and economy in government run headlong into progressives' core commitments to social insurance and an adequate safety net. Yet a fusionist synthesis is possible nevertheless, for the simple reason that some kind of compromise is ultimately unavoidable.

First we have the de rigeur Yellow Peril schtick:

The greenback is sinking mainly because the United States runs an immense trade deficit with the rest of the world, especially East Asia. Countries like China, Korea, and Japan have an unhealthy co dependency with the United States. Their governments help their industries capture leadership in technologies, products, and jobs. They then sell America far more then they buy. However their central banks happily lend those dollars back to us, so that we can finance the trade deficit and keep buying their exports.

Huh? He was just talking about a deficit vis-a-vis Asia, so how did we segue into the dollar-Euro gyrations?

In fact, it's good for the trans-nats -- now an even stronger Euro will allow old Europe to share in the good-paying job demolition derby. The falling dolar readjusts the deindustrialization rate between the two advanced economies, since the dollar-pegged (and therefore also falling) east Asian currencies are "facilitated" in their "Asian invasion" of Europe.

According to Bob K, American trans-nats are hapless, myopic dupes of the heathen Chinese, since their low costs are

enticing US manufacturers to locate production in China to take advantage of the cheap labor, government subsidies, and depressed currency...

Of course, you write long enough, sooner or later you say something that's true. Here's Bob again:

Treasury Secretary Henry Paulson goes through the motions of pressuring the Chinese to let their currency trade like normal currencies, but Paulson doesn't really want that outcome...

Pure purple-spotted horse feathers. A run by who and toward what? it's pure piffle. A controlled rise of the yuan/rmb against all North currecies over, say, five years, to twice its present value presents no problem, if the North central banks do another accord like they did in the mid-80's for the final yen rise. This is easy as slicing a banana.

After much more of this gas-baggery, Kuttner finally gets to the heart of the matter, straight from Hamiltonian central:

Paulson's predecessor as treasury secretary in the Clinton administration, Robert Rubin, now a senior executive at Citigroup, confirmed to me in an interview that Wall Street wants only the most modest dollar adjustment...

Here's the peroration:

Due to our dependency on foreign financing of our trade imbalance, which in turn requires confidence in the dollar, we can't behave like normal countries... let our currency fall, and thereby make our products cheaper in world markets... improve the trade imbalance.

It gets worse: Bob wants us to Rubinize the federal budget, because "The precarious dollar is also weakened by the big federal budget deficits." That is, we buy overseas stuff with the tax cut money and higher take-home. Conclusion: cut, cut, cut. Mister president, tear down that entitlement.

Read Sirota's redaction for yourself, but sounds to me like a year's supply of bologna. As reported, and as I read 'em, each one sounded less and less like Brutus at the fall of Caesar, and more and more like Falstaff's account of his woodland "mugging " by Prince Hal.

It's really "vastly amusing," isn't it, as an ex-girlfriend of mine use to say, 35 years ago, after watching a string of farcical little pipsqueaks approach and try to impress her, on a Friday night in one of those early 70's era dating bar settings.

as Public Citizen's director of Global Trade Watch, Lori Wallach, demonstrates, holding up a giant compendium of NAFTA and WTO rules: "If there was 'free trade,' a couple of pages would do. This is about who write the rules. This is about corporate managed trade."

But may Johnny hit his one note again here? Despite Ralph hitting on the union and green beats, once again there's no mention of the overvalued dollar.

Okay, so it's one note -- but Keerist almighty, mates, its high C!

1. Trade is most prominent, but it may be the least important of my top five. Measures to protect better-paying jobs in the U.S. are feasible but only promise results to a limited extent.
2. Deficit dementia. The dirty secret in economic policy is that most economists, radical, liberal, moderate, and conservative, understand that the Federal budget need never be balanced, that moderate deficits can be sustained indefinitely. The implications of tolerating deficits of two percent of GDP -- over $200 billion in today's terms -- rather than a deficit of zero are huge.
3. Social Security. Forget "there is no crisis," the clarion call of anti-Bush campaigners. The new slogan should be, there is no problem. No benefit cuts are necessary for the foreseeable future. If anything, there is a projected shortfall of income tax revenue required to repay debts to the Trust Fund, as per current law, as well as for maintaining other Federal programs.
4. Health care. There is no crisis. There is, rather, huge projected growth in demand for an ever-expanding menu of treatments, and the burden of managing efficient, ample, and fair public sector finance of this care.
5. The Imperial Fed. Our true economic overlords, the Federal Reserve Bank's Board of Governors, have arrogated to themselves the right to ignore their mandate for full employment, elevating slow-growth anti-inflation policy over the unparalleled benefits of tight labor markets. Trade is important, but in the grand scheme of economic security, it is also a pigeon-hole.

He sent along these links:

http://counterpunch.com/quigley12292006.html

http://www.nytimes.com/2006/12/26/us/nationalspecial/26housing.html?pagewanted=1&_r=1&th&emc=th

... on the landlord economics behind the ongoing ploy to "cleanse" the Big Easy -- in this instance, by demolishing around 20k units in "the old projects" for wish sandwich replacements.

His comments and clipouts:

Third law of avarice: there's always more money in removal. Thus the Counterpunch piece:

"Lafitte could be repaired for $20 million, even completely overhauled for $85 million, while the estimate for demolition and rebuilding many fewer units will cost over $100 million."

"The way they were constructed, it's not law-enforcement friendly," said Lt. Bruce Adams... "All those entrances and exits. The fact that it's so condensed is causing the problem... with all the vacancies... you didn't know what was up the stairwell."

P.S. -- I must say, even for the Baron, this e-mail ended on a curiously tangential note: after a not surprising hyperbolic turn toward self-glorification -- "If it comes to a showdown, Jaybo, rest assured I'll be down there. I'll go back and fight, right along side my brothers and sisters" -- one wonders why he adds this: "Mark my words, if the cops attack in force I'll be the last Georgist standing! Death to all ground rent! Baratarian liberty for one and for all!"

Channeling the ole buccaneer himself?

Here's the Concord Coalition, whipping its lathered steed though every village and town of once-thrifty America, crying "The red ink is coming! The red ink is coming!"

http://www.concordcoalition.org/

The Concord Coalition is a nonpartisan grassroots organization dedicated to informing the public about the need for generationally responsible fiscal policy.

Former U.S. Senators Warren B. Rudman (R-NH) and Bob Kerrey (D-NE) serve as Co-Chairs of The Concord Coalition. Former Secretary of Commerce Peter G. Peterson serves as President.

Mission possible: in a mad fiscal panic and ignorant brute fury, cripple the FDR-LBJ social transfer system, like King Kong does that Manhattan IRT train in the 1932 flick.

Specimen -- I use the word advisedly:

It is often said that our political system only responds to a crisis. If that turns out to be true, our children and grandchildren are in big trouble.

• 2024 -- Social Security, Medicare, Medicaid and net interest consume all revenues; the deficit hits 10 percent of GDP.
• 2025 -- Net interest exceeds Medicare; debt held by the public exceeds 100 percent of GDP.
• 2035 -- Net interest exceeds Medicare and Medicaid; debt held by the public equals 200 percent of GDP.
• 2037 -- The deficit reaches 20.5 percent of GDP, exceeding the size of today's entire federal budget.
• 2039 -- Social Security, Medicare and Medicaid consume all revenues.
• 2041 -- Debt held by the public equals 300 percent of GDP.
• 2045 -- Debt held by the public equals 400 percent of GDP.
• 2046 -- Interest costs, at 21.6 percent of GDP, exceed the size of today's entire federal budget.
• 2047 -- Debt held by the public equals 500 percent of GDP.
• 2049 -- GAO model blows up because the economy is in ruins.

Why is it, when I read soft-shoe ballyhoo hokum like this, I see top-hatted Peter Boyle in Young Frankenstein, stumbling cane in hand and yowling in agony, "Puttin' on the Riiiiitz!"

http://www.prospect.org/print-friendly/print/V15/2/delong-b.html

...you will understand the wiring diagram of the Dem fiscal hawkery. Here's a teaser:

Clinton rejected the social-democracy strategy in favor of... the "Eisenhower Republican" strategy. Make economic growth the first priority. Attempt to get the Federal Reserve to be dovish on interest rates in exchange for seriously reducing the deficit. Take other steps such as trade liberalization to try to boost growth. Reform rather than expand social insurance so that you can argue that taxpayers are getting good value for what they are buying. Hope that these policies will boost investment. And make the Clinton legacy a high-investment, high-productivity growth expansion. If all goes well, a decade of rapid growth and a resolution of the deficit will open up new possibilities for progressive policy.

This was the strategy that Bob Rubin executed, first as head of the National Economic Council and then as treasury secretary under Clinton. Rubin's new memoir shows why he was able to do such a superb job, close to the very best job that could be done.

And oh yeah -- since it's the full Bob Rubin monty, written by one of his top suckling pigs, Brad deLong-eurs: while reading his narrative of the Clintonian fiscal high road, for the sake of a Millsian objectivity, banish this image from your memescreen:

Yep, that's Brad -- the Pugsley of the dismal science, if ever there was one.

http://www.citizen.org/publications/release.cfm?ID=7501

There certainly is a strong need for the United States to become a fair player in the global economy. But the new Democratic Congress is far more likely to help achieve that goal -- as well as the goal of its own re-election -- if it calls on the administration to not escalate WTO talks that are likely to lead to worsening income distribution at home and economic and social instability abroad.

In a recent CAP publication... a Clinton administration official who had previously advised the Mexican government on NAFTA has tried to make "The Case for Reviving the Doha Trade Round" of the WTO....

... the group seems out of step with the majority of the Democrats' base and progressive thinking worldwide on the WTO with a 2005 report even calling WTO escalation "critical to our future prosperity and security."

Well, how's this for openers: a firm fierce jabbing finger of scorn and derision at our Unitary Prez and top-kick decider. Nyaah, nyahh, you, like, suck at trade, duude.

http://www.ndol.org/ndol_ci.cfm?kaid=131&subid=192&contentid=254186

He's presided over a long series of blunders and lost opportunities for trade expansion.

...agreements ... marked by politically motivated attempts to polarize trade along partisan lines ... concentrate trade sacrifices in Democratic constituencies while avoiding reform of special privileges for Republican-leaning industrial and agribusiness lobbies.

In a country where loss of a job often means the loss of health insurance and pensions, and a calamitous decline in living standards, it's no accident that many Americans perceive national trade policy as indifferent and adrift, and don't trust their leaders to negotiate or enforce sound trade deals.

Okay. So now George and company have demolished huge hunks of our industrial base, like it's a college frat prank. What can we vital center types do to help? Wait for it:

Fortunately, key Democrats in Congress.... understand the false choices so often posed in the trade debate and are looking ahead toward new and fresh approaches... First, a short-term renewal of Trade Promotion Authority for the sole purpose of concluding the Doha Round.

In conjunction with a progressive farm bill, completing Doha is the best opportunity to capture new markets and jobs.

That's all well and good if you got a portfolio, or a top trans-nat executive position -- but for us just-gettin'-by on the job types, here's the real beefsteak: "a significant down-payment on a new social contract." A "down payment," get it? Not actual bigger, better, broader, faster-acting collision mats for the inevitable stream of losers -- and certainly not a full

comprehensive socal compact that includes universal health coverage, universal pensions, a reformed unemployment insurance system, and other economic security measures for middle-class families.

"Congress ... make(s) the support for health insurance and job placement now available to trade-displaced workers through Trade Adjustment Assistance open to all dislocated workers"

Pretty small beer, right? So far (and frankly, to my surprise) beyond egg-facing the boy emperor, these Dembo trogs don't seem to feel a strong and compelling need to stretch leftwards or down, toward us little angry folks, and paint themselves as the kind, patronly alternative to the Bushco steamroller. Mark my words though, they will, and sooner rather than later, I see a stampede a-comin' our way -- wise men bearing us... gifts.

It's only to be expected -- obviously a counterattack is needed since the prog-pop steamroller is crushing everything in sight, mind-share-wise. Alarm bells are ringing loudly. The orcs of magical liberalism, once so confidently streaming forth from the Clinton NewDem/DLC Orthanc are now in ignominious retreat, those marvelous gravy train years of the high 90's long forgotten by the jobbled masses.

But Third Way has the antidote. If you'd rather not wade thru any more Third Way swamp than you have to, here's a quick takedown by Tom Palley:

http://www.thomaspalley.com/

Now I know Tom's usually a far too ponderous grappler for real folks to dine out on, what with his smokestack English grunting and gripping and his all-too-conspicuous cast-iron union suit, but here his blend is oddly perfect.

And if that's still too much, here's some quick notes for my fellow ADHD types.

Thirdies message these lies till they feel like facts:

1. America's middle class is far wealthier than neopopulists believe or say.

   In fact, of course, the bottom 60%'s wages are sleeping on a 25-year rollaway cot.

2. The huge trade gap, despite clownish appearances to the contrary, is really the dark side of very good news for us jobbled second stringers, pikers, duffers and bottom feeders.
3. All that house debt is good for us, too!

Don't mind that big white thing out there up ahead -- it's prolly an ice cream barge.

http://counterpunch.com/roberts02192007.html

Paul's what you'd call an off-the-reservation 80's supply-sider. Like better-known guys who play economist/prophet of doom on TV, Paul likes to rage against the transnational project to de-industrialize America, job-strip the nation's skilled and educated, and generally run this graceful land down to Haitian status. That is to say, Paul is running with the right-flank libertarians as part of the present rising tide of national populism.

Unfortunately, his economics leaves much to be desired. Of course, as my dad, Wild Bill Paine, always said, "cheerleaders don't have to do the blocking and tackling, son" -- so I guess it don't matter much when Paul, trying to explain why the real global system just don't work like in the textbooks, writes of "the two conditions on which comparative advantage depends":

• Capital must be immobile internationally and seek its comparative advantage in the domestic economy, not move across international borders in search of lowest factor cost
• Countries have different relative cost ratios of producing tradable goods"

And as for number one -- having met the pillar, here's the post: for condition number one to hold, we would need to wipe out the entire international credit system. So the Roberts sine qua non conditions for international trade are a combination of the impossible, with the wildly, futilely excessive.

Having said that, though, I have to admit the piece is a nice attack on the shameless trans-nat shilling of one Michael Porter, of Harvard Yard and something called the Council on Competitiveness. Even if Porter's economics is barely press-room quality, at least he knows who's behind all this job massacreeing:

This argument [by the aforementioned Coun on Comp] shows that the report is written from the standpoint of what is good for global firms, not what is good for America.

It made some sense when General Motors claimed that what is good for General Motors is good for America, because when the claim was made General Motors produced in America with American labor. It makes no sense to make this claim today when what is good for a company is achieved at the expense of the American work force.

Seems like a long time ago now that blow-me Bill was able to sell his line -- "play by the rules and our party will do you for the rest."

That DLC joyride hit a big deep dark pothole, rounding the bend into the new century. Lotta geeps suddenly had a "this is all total bullshit" moment, and the Clinton line needs a makeover.

But the tower trolls' smiling hopeful apologists at Third Way offer -- what? The promise of a fresh deck? A new dealer?

Nope. Third Way has some new rules of the game for us.

TW proves to their own satisfaction that this old deck of ours ain't really stacked... well at least not so bad... at least, errr... nothing like so bad as these right out of Nowheresville, barefoot, ringwormed, new populists are trying to make out. But still, the junior woodchucks generously allow, we as "progressive realists" know there's always room for improvement. Excelsior, cries the pious monk.

If we can't change God's and freedom's deck, we can try changing, or rather mending err mending our own habits, can't we? So without any further delay, let's give a warm rube welcome to Third Way's tablets from the mountaintop, a new covenant with the Yahweh of international capital. Working title: from lunchpail, to laptop, to scrap heap in one continuous kaizen motion.

Step one: face it, it's not enough to work hard anymore. Now you gotta work smart too. In particular, forget a raise if you ain't got no 4-year college degree. You are headed straight downmarket, pal to Tiajuana wages. And oh, keep this in mind -- even after you aquire that 4-year sheepskin, better convert that student loan into a 401K as fast as possible. You're gonna need it, 'cause retirements are getting longer and the dance of death way way costlier.

And don't, whatever you do, look back, and don't look ahead. Because the old and infirm are growing faster and faster than the young and firm.

So, Third Way tells us, I got your job site strategy right here. Think portablity, disposability, scrapability. That's you, your job, and your benefits. Under the new "you're on your own, asshole" rules, from day one to night zero. And oh, you'll need to prefigure a dry-gulch retirement and health plan.

Well, what can we say? Brace for whitewater, gang. And don't blame the corporations, please. They're endangered species, the sperm whales of profit, and they have come under a new set of brutal market-inflicted rules, too, just like you -- poor babies.

In a nutshell: because the pirate gun is at their head, and the wolf is at their executive bathroom door, there can be no more Mister Nice Guy.

If you thought Mister Burns was a bummer, try 21st century market reality, as seen from behind the corner office desk. Can you spell merciless? This is not Madison Avenue hype here. Competition these days is really, really merciless. No more fat dumb and happy lifetime leapfrogging, no more generous pay envelopes at Santa time. There are too many lean and hungry Asian corporations, TW warns us, out there on the global prowl, ready to eat my lunch, your lunch, and your coffee break too, also your spouse's job and happy hour and.... In fact, you, all of you, can expect to get downsized and innovated out the back door, and sent off on a jaunt of ever less opportune job opportunities. Jack be nimble, Jack be quick -- and I mean 24/7, or Jack be sleepin' on a heating grate, cause Mister Moto bit off his balls.

To generalize the Third Way vision: we are now in a sea to shining sea, totally integrated earthwide economy, where its not enough to make something. Not at all. Production is for starvers. Today, only corporations that make themselves perpetual creators of neat new stuff can expect to meet the same payroll tomorrow they met just yesterday. So the Third Way rule of effective survival play: plan on hoppin' in and out of Strip Mall Tech, uppin' your skill bank, just to keep even.

You'll need new skeeeelz more often than a new car,to land on your feet at your new outfit. Oh, and by the way -- the outfit-to-outfit hop looks to be getting only faster and faster, and the skill set strips will be leaving you nakeder and nakeder.

Fuck Third Way and the horses' rules they rode in on. Come that inevitable next job whack, just shoot your boss on the way out and let the Clintonian effective-death-penalty state take care of you. At least you'll get three squares and central heat until you've exhausted. your appeals. And when the end comes, it'll be the most competent and effective medical treatment you'll ever get.

http://www.washingtonpost.com/wp-dyn/content/article/2007/03/05/AR2007030501440.html?referrer=email

Familiar with the buzz phrase, "creative destruction"? Here's how it applies to factory jobs: destroy a $25 an hour job, create a $12 an hour job.

Enter wage insurance, to head off resistance to this benign and laudable process. Plans are rife, but here's the great Schumer's version:

... cover almost any displaced worker of any age who loses a job for almost any reason and takes a new one for lower pay. Workers who make less than $97,500 [are] eligible... benefit... a maximum of $20,000.

the cost of the program... roughly $3.5 billion annually... could be covered by adding $25 to every worker's annual unemployment tax.

All nice and social-market like, eh? Sadism with a Swedish accent, one might call it -- except that the Swedes wouldn't have added the double injury of paying for it with a regressive flat tax. That's good old Amurrican know-how at work there.

Mother Clinton recently sent a letter to Fed chairman gentle Ben Bernanke, and (irony of ironies) also to that old China handjob, secretary of the Treasury Hank Paulson, registering her grave "concern" over Wall Street's echoing of last week's Shanghai stock market convulsions:

If China or Japan made a decision to decrease their massive holdings of U.S. dollars, there could be a currency crisis and the U.S. would have to raise interest rates and invite conditions for a recession.

If Russia made a decision to launch its nuclear missles fleet at the US...

Then there's the other howler --

the US would have to raise interest rates...

But this is all quite airy-fairy. Suffice it to say, if this letter is any indication, St Hill, if she ever returns to the White House, plans to use hysterics as a policy club.

What's the embedded objective here? consider the intro line:

As we have been running trade and budget deficits....

Try something like this on for size: "We must raise your taxes and cut your benefits. Given the terrible twin deficits, it's the only... prudent thing to do."

After all, they are... the nanny party.

The great lot bomb has not really exploded, so immediate swarms of houseless folks is not in the cards. It just can't happen that fast, given the specific mechanics of that market. But a great social crime was nonetheless committed here -- all foreseeable and, I suspect, in some important places, foreseen. In fact, any toadstool saw it coming, what with all that credit pumped into the house lots of America like so much helium; and sure enough, it's started to show its hideous second face, as these over-yeasted values collapse, but ever so slowly, like the world slowly drained after the 40 days and 40 nights of rain.

And like a bee's-eye multiple of that Biblical tale, many a family ark will be left teetering high and dry on a mountaintop -- in this case, a mountain of debt. Oh the wailing and gnashing of teeth this will bring. And since along the same lines as Jehovah's flood, this was a purely arbitrary willed cataclysm, perhaps the House of the people's representatives oughta start looking into its author, one Alan Greenspan, late of the Fed chair, by way of the Rand cult and a vote of confidence from Wall Street. Barney, start your Kafka penal colony machine, baby.

Hey, a guy can dream, right?

http://blog.aflcio.org/2007/03/16/12-miner-deaths-resulted-from-series-of-decisions-by-sago-owners/

Coal miners die often just because corporations must exploit them to make it all worth the digging and the dying in the first place.

Brad Setser's is the best site I know of to follow this protracted nightmare. Here's a recent snippet:

http://www.rgemonitor.com/blog/setser/183938#readcomments

The US current account deficit with Asia... is still rising, while the deficit with Europe and the NAFTA countries is heading down. Why? .... European currencies -- and the loonie -- have appreciated, while Asia has resisted currency appreciation....This pattern -- adjustment with Canada and Europe, but not with Asia -- was quite apparent in the monthly trade data....

US imports from China are still growing at a 20% y/y clip. Overall US imports from the Asia-Pacific are up by around 12% -- ....the US trade deficit with Asia is still rising.

What of old Europe? US imports from Europe.... up a bit less than 3% y/y in January.... The US trade deficit with Europe is falling.

And then there is Canada.... US imports from Canada in January 2007 were about 6% below what they were in January 2006. December 2006 imports were 10% lower than December 2005 imports."

Answer: they mostly leave it to their Wall Street owned Dem colleagues to take care of stuff in that area -- which leaves them enough time and "juice" to focus on tea and sympathy for its victims here.

http://www.tpmcafe.com/blog/coffeehouse/2007/mar/19/state_tried_to_stop_subprime_bubble_but_the_feds_shut_them_down

... where he ends optimistically with this:

The new Congress seems more willing to grapple with the predatory lending problem, with Congressman Barney Frank from Massachusetts saying he would introduce legislation to restrict subprime lending.

And the master Shylock here is not some latter day strip-mall tormentor of little Nell, but that inky-haired taxi dancer from Randmania, yes, I mean Alan of green stables.

http://www.cepr.net/index.php?option=com_content&task=view&id=1080&Itemid=8

To me, jobbling through profit-first private-sector America can't be done for under $20 an hour, without a sense of oppression on top of the for-sure for-sure exploitation, no matter the wage. But I'm prissy that way. According to the aforementioned mobility agenda at CEPR, a bum wage is anything paying less than about $11 per hour*, and their total on these deeply sunk wage smurf type jobs is 40 million, or about 1 in 3. Hey, 1 in 4 pay downright poverty wages**!

So what's this mobility mob's notion of a well-compensated job? One paying over $16 per hour (about four bits shy of the median) and in addition, has a serious company contribution to a health insurance plan, and at least some sort of defined contribution pension plan.

About 1 in 4 of us jobblers are holding down one of those beauties.

Ahh ain't this our America somethin'? Gotta love the place -- errr, if you can't afford to leave it.

**$9.83 per hour.

Throughout it all he conducted himself with a gusto and a sweatless elan worthy of that other hard-nosed runt named Bobby -- you know the supercilious half-pint with a heart of cold cream, the one that was about to save America from Amerika, till he got himself assassinated by a very early one-man anti-Zionist commando unit named Sirhan Sirhan for offering Tel Aviv all the jets they could eat....

But I stray, don't I? Back to the as yet unassassinated Bobby. Unassassinated, but nevertheless over. His ticket is punched. Not only is the guy in trouble, he's the mother Clinton of party political economics.

Don't believe me? Then read between the lines of this "think it all the way through" piece by my mentor, Robert Pendragon Kuttner:

http://www.prospect.org/web/page.ww?section=root&name=ViewPrint&articleId=12573

A blind spot in the usual story of the Democratic party's capture by "interest groups" is the failure to notice Wall Street as an interest group. In the usual media account, the obstacles to the party's modernization are such groups as abortion-rights advocates, blacks, gays, and unions. Candidates can score points with pundits for showing independence by taking on, say, the unions on school vouchers, or African Americans over inflammatory rhetoric (Sister Souljah), or civil libertarians over the death penalty (then-Governor Clinton's refusal to spare Ricky Ray Rector).

Such actions are said to show political courage by resisting "politically correct" politics and entrenched interest groups. But taking on the most powerful Democratic Party interest group of them all -- Wall Street -- is viewed as a sign of recklessness, unsoundness, demagoguery, and political suicide. A mark of Wall Street's ubiquitous power in defining the limits of the politically thinkable is that its power is hardly noticed. The personification of this power is Robert Rubin.

I write this after reading of the long-anticipated tariff slap the Bushco circus put on paper imports from the People's Republic recently -- and while announcing it, not dispelling notions of more such moves to come.

Important development? Not especially, but here's an inner story that might be, as told to us by the Gray Lady:

http://www.nytimes.com/2007/03/31/business/31trade.html?_r=1&th&emc=th&oref=slogin

Some lawmakers... complain bitterly that China unfairly ties its currency to the dollar which aggravates the trade imbalance....

American officials say there is no thought being given to citing currency policies as a form of subsidy....

For one thing, because the numb-nutz over at the DOC (donkey occupied Congress) for various and quite sundry reasons aren't pushing this "key" to the crisis. Start with Sander Levin of Michigan, chairman of the trade subcommittee of the House Ways and Means Committee: Hey Sandy, you stilted little fuckwit, where's the forex fiddle fit into your plans for saving the domestic auto industry?

Now let me tell you, forcing a revaluation on China would indeed be "world historical" and in the full Hegelian sense. Who knows -- might even begin a process that could turn around our 33-year industrial nosedive.

But don't hold your breath.

A friend once told me oh, four years ago, that we would be able to tell when the Democrats are on the upswing: it will be when Robert Kuttner decides that trashing other Democrats--not arguing about the future of a party, not arguing about a good society, not debating honorable adversaries, not thinking about policies, not discussing issues, but simply trashing other Democrats--is his Job #1.

Well, it must be that time.

Robert Kuttner trashes Robert Rubin."

The blog attack is on my close personal liberal friend Bobby the K Kuttner, who only just -- well, it seems like yesterday -- I bashed right here at SMBIVA with my trusty pigs bladder.

And for doing what? For mugging Bobby Rubin, the chef in perpetuity to the Clinton ear of the donkery, yes, boy scout Bobby Bondage, that baker of the flattest of policy souffles.

And behold, the final and consummate beauty of all this blog attack is by none other than Brad Delong himself, my man in the engine room, the Pugsley of the dismal science.

I wish I were George Burns, so I could ring out the last "exquisite' feature in this week's episode. For a guy like me it just don't get any richer than this. Donk egghead frenzy at its finest.

Relish as I do this final Brad Jr bloviation:

Kuttner, you see, is not in the information business. He is in the character assassination business.

He's just what the label and brand implies -- a dry 8-inch DLC cork for Uncle's budget bottle. I bet he's a parson's son like Dean Acheson. He even looks like a loan officer.

But I'm here to tell ya, he's up to date. This cuss loves the new mortgage market. Maybe he looks like he'd say "Sorry, Mr Chubb, we can't loan you that today. Why don't you go home and save your pennies and maybe come back when you can put down a real down payment?" (Imagine staring at that Adam's apple bobbing away as he says this.)

But he really don't say stuff like that, not about householders. Nope, he believes "Mr Chubb, you're going somewhere! So here's the loan you requested, and here's 20% more! Buy yourself some business suits, and the wife a new car!"

You see, the new "supply-side" trick play in town is not to cut top tax rates, and load the diff on payroll. Nope, among the banker progs that inform guys like Oby and the Kerry tree, the watchword is to raise middle America's debt nut.

I call it the peonage effect. Get the nut up to the max based on potential future earnings. That's right, chain these raw recruits to the corporate monkey bars for life. When you owe, baby, and all you got to sell is yourself and the domestic partner.... Debt will make 'em climb faster, even as the ladder slides out from under 'em.

But Uncle's borrowing? Well, pard, that is an entirely different story. Deficits incurred to increase social spending only makes life too easy for the jobless. Now if you tax-extract it from payroll.... that's different.

Get a sense of this porcupine? Here for your day's punishment is an article (or something like an article) he scrawled for the DLC last year:

http://www.ndol.org/ndol_ci.cfm?kaid=125&subid=163&contentid=253989

Message: the growing household wealth gap is the reward of virtuous savings and investing habits.

The main reason the capital gap has been widening -- aside from the effects of the recent tax cuts -- is that higher-income people have higher savings rates and a much higher likelihood of owning high-return investments, such as stocks and other forms of equity capital. For example, while just over half of the middle class has a retirement account, almost 90 percent of the top group does.

http://www.latimes.com/news/nationworld/world/la-fg-freeport21apr21,0,5229406.story?track=ntottext

Read in the LA Times how these globetrotting boyz expect to face down a sit-in strike at the world's biggest gold mine in West Papua.

The striking tribals are pissed that they get about $200 a month to extract metals in a boom market. Best part: it's all on their own land! Yup, the company has rogered these folks for nearly 40 years, and paid a fortune to local militia types to make their mission bigger and tougher all around, badder then the law.

Operations like this have that fine Mr Kurtz patina, updated to today's faster traffic.

The "free to choose" empire marches on!

http://www.nytimes.com/2007/04/24/world/europe/24yeltsin.html?th&emc=th

Boris N. Yeltsin, the burly provincial politician who became a Soviet-era reformer and later a towering figure of his time as the first freely elected leader of Russia....

As far as I can tell he was the protege of an ad hoc CIA/KGB security cartel that picked him out of the parade of political drag queens that the Gorby travesty -- picked him to be the king of topsey-turvey. The man leaped right out of a very large vodka bottle into the command chair of the world's greatest-ever national demolition job.

He imploded Russia's economy. His Harvard-engineered big bang not only ended Soviet stagnation, it blew the fucking place to rubble in a matter of 2 or 3 years. No slow step-by-step removal, just babooom! Down comes all the decaying crumbling edifice with one huge final "indignity", and after that he let the hounds loose. The conutry went straight into a bout of untrammeled, freebooting, swashbuckling, buccanneering horrors unseen among white folks since the British fleet shut down mainframe Caribbean piracy in the 18th century.

This dancing bear of a people's leader ran a whole nation the way mayors ran Chicago in the roaring 20's, and by the time the music stopped, the future of about half of Russia's households had been completely destroyed. He'd sent em back to the level of existence they'd left in 1861. Sur,e he made a few oligarchs "tycoon for a day", but by promoting one Langley-Wall Street stooge after another into the policy limelight, he managed to send Russia spiralling down so low the CIA unilaterally broke up the ad hoc cartel with the KGB, and flew home -- "mission accomplished, super power II is now a total fuckin' wreck."

And after all that -- after presiding over a wholesale poachers' slaughter and butchering of his beloved motherland -- after he'd let the bastards haul off the nation's ivory tusks to accounts in Switzerland -- the dear late departed Boris here had the gall to go out, slurring and boo-hooing and blithering his apologies for letting this pack of westernized wolverines shred the carcass of his nation's productive capacity and then piss all over its bones.

And yet, to his credit he was freely elected, not once but twice -- the second time in full Madison Ave carnival style.

Bye bye, you fuckin' drunken boob of a Wall Street stooge. They played you and rolled you like some lottery-winning rube that's wandered into a big-city cat house.

http://www.tompaine.com/articles/2007/05/04/missing_words_for_the_new_trade_debate.php

The gist: Uncle Sam is "bilaterally" levering emerging nations' legal systems, as much as their markets, into better vehicles for TNC penetration. Example: in these draft agreements, transnat "investors" gain the right to sue host countries, right there in the host's own civil justice system, for "damages" that result from said host gubmint's changes of laws and regulations. You might call it the criminalization of sovereignty.

Needless to say, it's all in the fine print and hardly new -- check out NAFTA. Which brings me to my quote of the day, from Mighty Joe Stiglitz, economist extra-ordinaire -- who sheepishly admits he bit into the NAFTA quick shuffle himself, while still a Clinton econ-con staff egghead:

It was only after it passed (NAFTA)that the potential consequences of this agreement became clear. Chapter 11 included a regulatory takings provision that allowed investors to sue states, with damages paid by the national governments.... If the United States signed on to an agreement without knowing what it was agreeing to, what did this say about other countries?

And after all, who can fault them for treating with these fritter-sized emergers this way? It's at least as even-steven as Uncle's agents in bygone days treated with his own little native red brothers.

Here's the house Dems' "new trade policy" manifesto, in bullet points:

http://waysandmeans.house.gov/media/pdf/NewTradePolicy.pdf

Remember the three little pigs and their anti-wolf houses? This is the one built of straw.

Just when you'd like to feed him to the woodchipper, leave it to ex-underwear model Dave Sirota to turn in a good tale:

... a handful of senior congressional Democrats and the White House - cheered on by K Street lobbyists - joined forces [Friday] to announce a “deal” on a package of trade agreements that could impact millions of American workers and potentially calls into question the entire election mandate of 2006 (I say potentially because the full details are still being concealed by both Democrats and the White House). You’ll notice the irony of the deal with just a glance at the front of the New York Times business section .... the deal was agreed to (though its details have still not been made public) on the very same day the U.S. government reported another widening of America’s job-destroying trade deficit.

If you want some background, here you go:

http://www.ase.tufts.edu/gdae/Pubs/rp/PB07-02WTOPovertyApr07.pdf

Congressional Democrats have been quietly negotiating with the Bush Administration to achieve a bipartisan consensus on trade, one that can move forward not only the Doha negotiations but the range of bilateral trade deals

....[S]ome congressional Democrats skeptical of the bilateral agreements seem willing to consider extending fast track authority beyond its current June 30, 2007, deadline if it will No. 07‐02 get a Doha deal done....

Congress should think twice before extending fast track authority to achieve a new WTO agreement. Most evidence suggests that the emerging set of tariff and subsidy reductions will have little impact on global poverty; according to the World Bank, the number of people living on less than a dollar‐a‐day will decline by less than one‐half of one percent with a Doha deal. More worrisome, some the world’s poorest nations may end up worse off, while some of the poorest people – small farmers – lose ground even in countries the World Bank predicts will gain from an agreement. Finally, the costs of liberalization to poor countries, particularly in lost tariff revenue on which they depend for key government services, make the new WTO agreement anything but friendly to development and poverty reduction.

Face it, America -- the jackass party is not only a war mule, it's also a cross border mule, carrying your job on its retreating back.

That trade growth pause the jobbled American majority voted for last November, is easily within the Dems' power to grant, simply by not renewing the Administration's "fast track" powers, which end this June.

The Dembo congress -- like with the Iraq gig -- can't claim "'tweren't us that done it," when your neighbor's jobless, and your raise went south. As of July, it'll be undeniably their baby too. So watch and laugh a bitter laugh as the Donkey Congos grant Cheney his fast-track renewal.

Unfortunately they ain't on a knife edge, poised above some lovely political abyss. Nope, as usual our federal power system is stuck on the same old, same old Orthrian teeter-totter. Up and down she goes, just 8 inches from the packed shit pile below.

Let's turn from this unedifying spectacle, for a moment, to another domestic "issue" -- our vast job- and wage-eating trade gap. Here's a second alert about the latest possible chance to build a people's speed bump on the road to zero industry. If nothing is done to renew it, the White House's "fast track" powers will soon expire:

http://en.wikipedia.org/wiki/Fast_track_(trade)

As mentioned here in an earlier post, this extraordinary congo-busting executive power to ram thru the people's representaive bodies any old Wall Street-crafted "international trade agreement" expire before the Fourth of July, unless they're rescued by an act of Orthrian magic.

So it's in the hands of the party in power over on the Hill -- the one with the long, all-hearing, twitchy ears. The party that in part has control over there precisely because its candidates claimed, most loudly, of course, in certain strategic open trade-blasted industrial districts -- to be the party of good job protection through "fairer" trade policies.

It just might come down to one guy, and who knows what runs the mind of fry-haired Charlie Rangel? On that, we 'll simply have to see what we see.

To be fair-and-balanced here, I feel I need to show the other hand. Maybe this sleaze treason won't be pulled off under the cover of nearly complete public darkness, as it seems the media has slightly noticed the issue recently

If you want to bone up on the stakes, I suggest this piece by union economist Tom Palley:

http://www.thomaspalley.com/?p=79

Getting fast track renewed or extended has a lovely parallel to the shootin' side of the GWOT saga, and is also of the very essence of our two headed governing beast.

In a related story, we find this very same Tom Palley, among others, trying to stir the frog pond of academic economists. It all seems to have started, improbable as it may seem, with an article in The Nation. Here's the best pull-together of links:

http://economistsview.typepad.com/economistsview/2007/05/a_role_for_hete.html

Upshot: the insider commanding heights of "the profession" are controlled by -- what else -- the society of sons of market liberty. But here's The Nation's scoop: seems these bold marketeers are willing to use "mafia tactics" to keep down skeptics and push outright heretics to the prestigeless margins.

Perhaps you're asking, "Just how, Owen, is this related to our killer trade gap and fast track?"

Summit orthodox econ-cons sing in all voices, "the best national markets are open national markets. Ergo, open wide, America, and take your medicine." The logic loons ask us to see that the best of all possible worlds requires we open up our national markets and let the TNCs bounce us jobblers back and forth till we ding so many profit bells for them that we all, at long last, feel like the "liberated" pinballs we are.

http://www.nybooks.com/articles/20275

Most Americans are troubled by the culture of dealmaking and financial engineering and insider self-enrichment.... by the callous treatment of workers and work life.... by the erosion of communities and community institutions.... Not very far below the political surface, most of us feel some version of the same vexed ambivalence toward corporate America -- dazzled by the conveniences and comforts it delivers, yet resentful of the tradeoffs that it continually demands....

I think his last shot catches this moment in America well, as the brewing winds of job site rebellion start reaching higher up the class tower, toward the penthouse corporate goblins, and out into the still nominally independent offices, labs, studios, and campuses of all our wonderfully creative symbol makers and shakers.

...it is hard to imagine... a fundamental transformation of these giant institutions. It is even harder to imagine a better world in which they remain essentially what they are.

But there's no end of fallback diversions. Handy exhibit, from the WSJ:

http://online.wsj.com/article/SB118177155165934441.html?mod=hps_us_insid

Bush adviser and prof at the famed Amos Tuck school of bizzzennnesss -- obviously both a scholar and a gentleman -- suggests that to reduce inequality, Uncle just up the payroll taxes on the above median wage workers and eliminate them on the bottom half.

Nice, eh? It's right out of the Greg Mankiw school of Mephistophelian grand rube bargains. One hopes even that Solomon of top decider-presumptives, St Hill, won't jump on this poison class wedge remedy. Doesn't seem likely. She might possibly just restore the status quo ante -- slap back on the Clinton 200k-plus tax rate structure, and administer a little whack to the top -- what, 5%? Not exactly the merit-class breadbasket, but surely its hubris elite.

What none of 'em will do is whack the donor class, with reversals of all the "incentivizing" tax cuts her hubbie and George Jr gave the capital-gains club.

Ahhh them one-percenters -- they sure can rock!

Bono, HUD Secretary to share stage

U2 front man Bono is everywhere these days.... the rock star plans to attend the Mortgage Bankers Association's convention in Boston this fall....

Bono -- perhaps best known these days for browbeating world leaders into doing something about poverty and AIDS in Africa -- won't be performing at the MBA convention. He'll be delivering a sermon... I mean the keynote address.

Hmmm... suppose he'll touch on the problems in subprime lending? Or just deliver a standard "call to action" pitch to enlist support for his "One Campaign to Make Poverty History"? It's easy to make fun of Bono's sunglasses, but the guy IS practically a saint.

The other thing that's a little strong is that line about "browbeating world leaders into doing something about poverty and AIDS in Africa." What exactly has yer man browbeaten these unspecified "world leaders" into doing?

Let all bearers of that most peculiar of commodities -- themselves -- come to Amerika like Kafka's figment does.

If "they" come here, then jobs stay at home . And even if we native-born don't fill 'em -- what's the net loss down-side-wise? And we can org 'em into unions if they share our freedoms, whereas back home they might get disappeared for doing such a naughty thing as trying to act collectively.

I say better the exploited wagery of the world unite here to fight the great class fight . Aren't we are all class brothers and sisters? Let's see to it the creators of all value get to capture a bigger share of the benefits of trade . Let's beat the trans-nats to the punch . Let's open the borders to our compadres. Through mobility at least equal to capital's, we have a higher wage to gain .

Look, the worst thing that could happen to Democrats is for voters to conclude that there?s no real difference between the parties, that when you replace Republicans with Democrats, all you do is replace sweet deals for Halliburton with sweet deals for hedge funds.

Now there is no need to get freaky about the DLC, except when they peddle bogus accusations of anti-semitism. (For that, Ford deserves to get slapped upside the head with a wet mackerel.) They are an indispensable part of the party. They are big generators of ideas (I started to write generators of big ideas). They bring resources to the table. I am happy to work and commune with them, where possible. I happen to think that in terms of basic principles of policy, they are pointing in the wrong direction.

In a nutshell, we need social-democracy at home and non-interventionism in foreign policy. The public isn't ready for that yet, but it can be led in that direction. The idea should be to unify the country around something worth following.

Link

Says her deputy campaign manager Bob Nash, "She'll be as tough as any Republican on our enemies." And on our friends, he might have added, if they don't shape up. At the Take Back America conference in June the candidate drew boos when she declared that "the American military has done its job. … They gave the Iraqi government the chance to begin to demonstrate that it understood its responsibilities. … It is the Iraqi government which has failed."

Well, maybe not right away on foreign policy, and given her voting record, maybe not ever at all. So okay, she might have the juice on social democracy.

As she runs for re-election to the Senate from New York this year and lays the groundwork for a possible presidential bid in 2008, Mrs. Clinton is receiving hundreds of thousands of dollars in campaign contributions from doctors, hospitals, drug manufacturers and insurers. Nationwide, she is the No. 2 recipient of donations from the industry, trailing only Senator Rick Santorum of Pennsylvania, a member of the Republican leadership.

That's one dubious disctinction, taking second to (former senator) Rick Santorum. The main problem with her from any "progressive" policy perspective is that she doesn't support single payer health care.

Public opinion is well ahead of Senator Clinton on health care and Iraq. I really don't think it's a question of leading them. For all the love heaped on Edwards and Obama, it's higly likely Senator Clinton is going to be the Democratic Party candidate -- and the DLC shows no signs of attempting to moderate her positions. So maybe getting a little 'freaky' about their influence is a good idea. And far from being indispensable, there's no way to get rid of them (short of turfing many Democrats out of office). There's no one in Democratic establishment who can seriously put a check on her or sway her if she decides to pursue a militarized intervention policy and cater to the health care profiteers. The Democrats and their voters are stuck with that. Pelosi and Reid aren't going to get all radical. Sweet reason and hard facts mean very little to them to begin with and once they lock in the votes, they mean nothing at all. I do understand that many Democrats do "believe in science", i.e. evolution is not evilution, global warming is not a hoax, vaccines work and so forth. But when push comes to shove. . .

"Raising retirement age or reducing benefits can't be ruled out if the Social Security system is to be saved from going bust, Rep. Charles Rangel said yesterday. 'All of these things are on the table to find some way to make certain that Social Security is solvent,' said Rangel, who is poised to take control of the powerful House Ways and Means Committee."

Link

Too much pragmatism will keep the country stuck where it is now -- prone to precipitous military adventures, diddling with the health insurance industry, upholding homilies about personal responsibility in a labor market where work doesn't pay and individual financial risk worsens.

This is certainly true. But neither idealism nor constructive contributions to a policy debate, nor any effort to help with a platform has worked. Some of very best have tried that. It has repeatedly proved useless. The Democrats who might wish to consider something besides a capitulationist "go along to get along" strategy are at the mercy of aisle crossers, dive artists and right wing thugs within their own ranks. The Republicans have had plenty of help. Building a credible threat is a better option, which for politicians means threatening their ability to get themselves elected.

It's not surprising that Ole Possum Brad Delong jumped aboard the Greenspan retro express – so has everyone else, from NPR's Philly thistle lady to Jon-boy Stewart.

But then again, Mr Delong is an expert on macro high policy. Hence his well-placed recent review in the LA Times of Herr Poison Pill's ghosted memoirs. To his everlasting discredit, Brad's taken this opportunity to produce a work of wondrous blend -- a toast to the great man, hoisting a cocktail glass filled to the brim with a pusillanimous mix of pomposity and cop-out humility.

Here's an example: according to Brad, he, the great Delong, was outthought, outjudged, out-wisdom'd by the fearless Fosdick of fiat credit 5 out of 6 times on key turning points in credit policy. Yup, Greenglue got it "right" 5 out of the 6 times these two mighty heads disagreed on "direction".

Now of course they mostly agreed. In fact, 30 out of 36 times they agreed, during Alan's 18 years at the Fed's tiller, but the one time Brad was right and Alan wrong finally came in the summer of '00 after the dot.com.pop. When Greeny "waited for more information to see how much the fall in stock-market values would affect high-tech investment spending before he acted," Brad would have dropped his rate pants right then and there, not waiting for the inevitable thud of falling corporate plant and equipment expenditures.

(NB: Alan waited much as gentle Ben "waited" after the mortgage pop, when we all knew it would affect housing construction.)

Here's Brad on the two times he figures Greenspan fucked up big-time -- the twin bubbles, tech stocks in the late 90's and house lots in the early 00's: “[These]two counts could be considered economic felonies.” Greeny claims he faced a cruel policy dilemma. According to Brad, Greeny figured

... he could have aborted the stock market and housing bubbles of the late 1990s and the early 2000s but only by paying an unacceptable price in idled factories and unemployed workers.

Here's Brad's take: "He may be right and he may be wrong in this judgment -- I don't know .... Imagine! Here's Mister Blabbermouth ready with a bold opinion on everything under the midday sun, now faced with a real deep test of his science and he -- what -- he plops out totally!

The whys of this sudden drymouth Sergeant Schultz-like "I know nossing, nossing" are prolly best left to the cui-bono boys to weave into a nice squalid pattern. I'll merely suggest even a casual look at any halfway detailed flow chart of how credit streams into both these "investment sectors" indicates several very clear, very simple, but profoundly efficacious cinch points, where pre-emption of market bubbles is possible way before they even emerge. Policies and regultion that are bubble prevention methods can be done – Hell, I could do it, it's that easy.

Smart market-specific timely regulatory interventions in the tech stock market and the house lot market in both cases would have removed the threat before either had a chance to blast the real economy. But then again, these mad Paine-type interventions would also pre-empt any sly moves by all those sharp fellahs out there, ever ready to exploit new wrinkles and loops to make additional tons of speculative fraudulent and sterile money.

After all, in the last analysis, it's not about the economy, stupid – not at all -- is it? It's about headline profit players, both winners and losers. It's ultimately all about the top carny's boodle, and not a bit about the bottom rubes' pocket holes.

http://robertreich.blogspot.com/2007/09/way-to-prevent-looming-recession.html

With the economy heading for recession... the question everyone is asking is how much [will] the Fed... cut short-term interest rates to stimulate the economy.... But a Fed rate cut won't stimulate the economy....[I]f a Fed rate cut can't prevent a recession, what can? Putting more money into Americans' pockets by cutting their taxes.... middle and lower-income Americans spend more when their taxes are cut... the biggest tax they face is the payroll tax.... the payroll tax needs to be cut ... exempt the first $15,000 of earnings from payroll taxes .... starting as soon as possible.

With a recession looming, Democrats need to stop being the party of Herbert Hoover economics.

More from the undauntable, 12-handicap R. Reich, former Clinton policy caddy, now chasing after the dembo-chiefs' golf cart, yelling with no effect -- "see that five-iron of mine on 13, guys?"

Bobby's club of choice for the present prog sandtrap lie? Forget lagging it up -- go for the pin: a net worth tax!

His words:

An annual wealth tax of one half of one percent on net worth of people holding more than $5 million in total assets.

Fore! Bob's playing through.

What's the equivalent, for our secular Sodom, of "Allah is merciful, Allah is great” in the land of Saud and Sand? I think it's something like this: "What's good for the TNCs* is good for us all."

Ask yourself next time you reach a fork in your head -- "How will this choice, properly made, help the TNCs?" -- and take your path accordingly

--------------

* Trans-national corporations, of course.

Imagine the TNC-donks had a designated double-domed mouthpiece -- who would it be but Larry Summers? His occasional columns in the Financial Times show us the momentary wind direction at the corner of Wall Street and Pennsylvania Avenue.

I think it's shifting. Take a look at this compaction I've redacted from a redaction at the site of mild and moderate Mark Thoma: http://economistsview.typepad.com/economistsview/2007/10/summers-how-ame.html

The vast majority of the US current account deficit is now being funded by central banks accumulating reserves as they seek to avoid appreciation of their home currencies ... Some means of engagement must be found with those who have yolked their currencies and so their financial policies to that of the US...

Maintaining global financial stability and the role of the dollar requires a more strategic approach -- a task that, given the political calendar, is likely to fall to the next US administration.... [The international system of exchange rates] needs to be radically reinvented .... any new approach must be premised on the desirability of a strong, integrated global economy that benefits the citizens of all countries, not on the idea that economists or politicians can calculate “fair” exchange rates....

The right and potentially effective case for adjustments in the current alignment of exchange rates relies on their unsustainability and the distortions they induce in macroeconomic policies, not on ideas of fairness to workers....

Multilateralism is better politics and economics than unilateralism but it must not become an excuse for inertia. Any new group should be as large as necessary and no larger, should meet with some frequency and should include central bankers. It should be analytically informed but everyone should know that key decisions will ultimately be taken by senior officials in the national interest, not by international organisations.

Will Larry get the job? If he does, we "workers" -- to use his word for us -- are in for a whole lot of nothin' good.

Larry Summers has banged the drum and shaken the rattles -- the Starving season cometh swift upon us: "The odds now favour a US recession!" He speaks in charcoal gray of course, but the content is unmistakable: it will "slow growth significantly on a global basis."

Now you all prolly agree with me that this Crisco-faced prick with eyes as sharp as diamonds carries behind that face a brain as close as one gets these days to a thinker in chief, a maker of medicine memes within "the plain folks' party". He's "our doc macro" for such as follow the lead of the Clintons and Obamas and Edwardses and so on. So when he sees a real good shot at a bluesy future for "the rest of this decade and beyond" -- well, it ain't, er, hopeful. Example, Homer family-wise: "Nationwide, house prices could fall from their previous peaks by as much as 25 per cent over the next several years." Ugga-bugga!

Now Larry has his remedy ready of course. I'ts got plenty of angelic detail, no doubt, but here's the short version: "Feed the credit hogs, feed 'em good, feed 'em fast and furious, give the fat fuckers all the Uncle sucker support they want" -- but make sure you wear a sober censorious sceptical expression while you do so:

"We do not have comparable experiences on which to base predictions about what this will mean for the overall economy, but it is hard to believe declines of anything like this magnitude will not lead to a dramatic slowing in the consumer spending that has driven the economy in recent years....it is now clear that only a small part of the financial distress that must be worked through has yet been faced.... These figures take no account of the likelihood that losses will spread to the credit card, auto and commercial property sectors. Nor do they recognise the large volume of financial instruments that depend for their high ratings on guarantees provided by credit insurers whose own health is now very much in doubt.... [T]he capacity of the financial system to provide credit in support of new investment on the scale necessary to maintain economic expansion is in increasing doubt. ..The extent of the flight to quality and its expected persistence was powerfully demonstrated last week...."

Sum up of the action ahead:

"Banks and other financial intermediaries will inevitably curtail new lending as they are hit by a perfect storm of declining capital due to mark-to-market losses, involuntary balance sheet expansion as various backstop facilities are called, and greatly reduced confidence in the creditworthiness of traditional borrowers as the economy turns downwards and asset prices fall."

"Then there are the potentially adverse effects on confidence of a sharply falling dollar, rising energy costs.... lower global growth as economic slowdown and a falling dollar cause the US no longer to fulfil its traditional role of importer of last resort."

"In such an environment, economic policy needs to be governed by the clear and public recognition that restoring the normal functioning of the financial system and containing any damage its breakdown may do the real economy is the central macro-economic and financial challenge facing the US."

"means the Fed has to get ahead of the curve and recognise – as the market already has – that levels of the Fed Funds rate that were neutral when the financial system was working normally are quite contractionary today."

... and not to Republican favorites that won't spend it, but to "low- and middle-income families" who will .

Larry quickly gets to the crux: let's not punish the evildoers!

"The time for worrying about imprudent lending is past.... The priority now has to be maintaining the flow of credit."

"There needs to be a comprehensive approach taken to maintaining demand in the housing market to the maximum extent possible. The government operating through the Federal Housing Administration, through Fannie Mae and Freddie Mac, or through some kind of direct lending, needs to assure that there is a continuing flow of reasonably priced loans to credit worthy home purchasers. At the same time there need to be templates established for the restructuring of mortgages to homeowners who cannot afford their resets, so every case does not have to be managed individually."

"The current main policy [Republican] thrust – the so-called 'super conduit', in which banks co-operate to take on the assets of troubled investment vehicles – has never been publicly explained in any detail by the US Treasury."

"On the information available, the “super conduit” has worrying similarities with Japanese banking practices of the 1990s...."

"for lack of transparency, suppression of genuine market pricing of bad credits, and inhibiting effect on new lending."

"Perhaps there is a strong case for [the super conduit] but that case has yet to be made.

Credit card debt is on the move -- up. Recall that usury destroyed the Roman republic. Oh, and recall this: the limited liability corporations have a de facto social contract with us ... their hired class: "we'll lend you what we won't pay you."

He belongs with Jerry Lewis, Matt Lauer and George Steinbrenner as a pomposity quartet riding in ticker tape parade down Wall Street -- ass forward, hands cuffed -- on clopping big-hooved sway-backed mining mules. And for garnish each can wear a ceremonial -- just pretendin' -- noose around their necks.

Here's Newz' latest sand-dance nullity, a typical banker's waiterlike suavity, as he clatters open the platters of skunk roast:

http://agonist.org/stirling_newberry/20080118/relief_restructuring_stimulus

Now don't get me wrong -- this isn't Babbitoid, Reagan-rides-again shit. This is the Ganymede of the prog wing of haute bankery speakin' easy here -- he's got the art-deco "Yes, buddy, I can spare a dime" gig down pat:

"In the present circumstances, the best relief program would end the tax breaks for the wealthy and shift that money in the short term to buffering groups hard hit by the economic downturn.... Tax credits and so on are, almost by definition, not the best way to do this, because they give money to people who already have jobs."

"[Tax rebates] violate one of the most important liberal principles: demand spreading. Demand spreading means, all other things being equal, it is better that more people have some money, than some people having more money. Social Security is based on this principle as is the liberal theory of government starting with FDR."

"As soon as a candidate, caucus or program makes "tax relief" its center, it is already marching to the right"

More than anything else right now -- first and foremost -- the fed gub needs to provide just that, "tax relief", at least to the tens of millions of "wage-challenged" households; and how else but through huge rebates out of the social security rip tide? That's a move to the right? Why? Because it starves the public beast? Lowers the cap on uncle's spending?

Folks, if the last 70 years of macroeconomics teaches us anything, it's this: there is no sane cap on uncle's spending till we hit purely frictional unemployment -- i.e. under 2%. And we got miles to go before we sleep.

Sum-up time? Oh no, not yet, there's more, way more. For one thing Newbie is playing John the Baptist for "a massive bank bailout," and he calls for "a stronger dollar" -- yes a stronger dollar, the present horror in the rust bowl isn't enough, I guess they all need to be jobless before we "liberals" can spread a little effective demand their way -- or should I say our way, the liberal way, the way of a hearty handout, not a job.

Sterling Blueberry is about as sinister an overaged Manhattan deb-party smarm sissy as ever laved locks. You figure maybe he's not Wall Street's poison apple pedlar? Well try this on -- it's his ultimate nightmare: selling "Wall Street to Dubai one bank at a time." The horror!

PS -- for those in need of a 5th Avenue homily, improving in some ways on Polonius:

"While we should never shy away from borrowing when we need to, and spending what we must, we should always be seeking to borrow and spend the least necessary, not the most possible. It's better go keep credit good, it is better to keep the money in the hands of the general economy, and it is better for Government to pursue plans that generate enough economic activity to support those plans by the increased tax revenues that come with increased activity. While nominal deficits aren't to be feared, actually downward spirals in the national debt - where the debt is growing faster than our real ability to pay it back - are to be avoided except in cases where swastikas and rising suns are actually blooming around the world, and not just in the imaginations of the 101st fighting keyboarders. Relief can be expanded by ending Iraq and ending tax breaks for the very wealthy. Restructuring can be best pursued by ending the weak dollar policy."

Note carefully the list of Shylock's long-eared people's elves below.

Where's the mandatory prison terms for the "corporate" looters that rigged this slurry up in the first place and last?

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=109&session=1&vote=00044

http://clerk.house.gov/evs/2005/roll108.xml

The yuppie jacquerie is stoking resentment against people who took out home equity loans. Some of the borrowers were undoubtedly villainous, but most of them were borrowing to stave off financial crises. Given the lack of pay raises and the increases in cost of living, going under was only a matter of time for them, once the bubble burst. Now their failure to keep payments coming is starting to affect the equity of "real people" and the yuppies are wondering how anyone could be so irresponsible as to do something to depreciate the assets of the chosen merit scholars.

The eventual meltdown was anticipated and fucking predicted. Hence, the Bankruptcy Bill. These are the Senate paragons of actually existing liberalism who joined hands with their wingnut colleagues to get it passed. Senator Clinton thoughtfully failed to vote.

 Baucus (D-MT)
 Bayh (D-IN)
 Biden (D-DE)
 Bingaman (D-NM)
 Byrd (D-WV)

 Carper (D-DE)
 Conrad (D-ND)
 Inouye (D-HI)
 Johnson (D-SD)
 Kohl (D-WI)

 Landrieu (D-LA)
 Lincoln (D-AR)
 Nelson (D-FL)
 Nelson (D-NE)
 Pryor (D-AR)

 Reid (D-NV)
 Salazar (D-CO)
 Stabenow (D-MI)

http://www.ft.com/cms/s/0/ae9ef538-ccf2-11dc-8df7-000077b07658.html

"It is critical that sufficient capital is infused into the bond insurance industry as soon as possible. Their failure or loss of a AAA rating is a potential source of systemic risk."

"Probably it will be necessary to turn in part to those companies that have a stake in guarantees remaining credible because they have large holdings of guaranteed paper."

"It appears unlikely that repair will take place without some encouragement and involvement by financial authorities."

Along the trail, lord Larry mentions my ex-boss, that moonpie-faced, baggy-pants "ahh shucks" happy billionaire and longtime ladies' man (tried to snake my girlfriend into his jet once with hints of lobster newburg) -- of course I mean Warren Gamaliel Buffett. Here's Larry:

"While attention to date has focused on capital infusions into existing institutions, it would be desirable for capital to be injected into new institutions that do not have the legacy problems of existing ones and can meet the demand for new lending.... Warren Buffett’s recent entry into bond insurance is an example."

I'm hardly the first to note this, but New York Fed chair Timothy Geithner -- a geeter with a hand directly on the heater, so to speak -- just shit his pants in public.

Telltale smelly excerpt:

"The U.S. economic and financial system is undergoing a very challenging period of adjustment and we are likely to be living with a high degree of uncertainty for some period of time about the ultimate magnitude and duration of the slowdown underway"

This is the face of the credit crisis in action: David M. Rubenstein co-founder of The Carlyle Group, private equity personified and prolly still making it at both ends.

http://www.bigthink.com/user/david-rubenstein

Well, read here how he's dumping his stale leverage play on mortgaged-backed securities. The downward cascade proceeds apace. Basics of all these fandangos:

"The fund was set up in August 2006 with roughly $670 million in cash from Carlyle's owners and other investors, and about $300 million in additional capital raised from a public stock sale. The capital allowed the fund to go to banks and borrow far more, leveraging its cash investment some 20 times into the portfolio."

"As the market value of the Fannie Mae and Freddie Mac securities has dropped, Carlyle Capital's lenders asked it to increase its cash equity from what was 1 percent to as much as 5 percent"

"In a statement, Carlyle Capital said that it had been unable to meet margin calls in excess of $400 million over the past week and that it expected its lenders to take control of its remaining assets."

"The lenders, headed by Deutsche Bank and J.P. Morgan Chase, began selling the securities last night..."

"But Owen!" you cry, "Check out this right here in the New York Record (American)":

Split Is Forming Over Regulation of Wall Street

WASHINGTON — As Congress and the Bush administration struggle to contain the housing and credit crises — and prevent more Wall Street firms from collapsing as Bear Stearns did — a split is forming over how to strengthen oversight of financial institutions after decades of deregulation.

Orthrus' two heads -- it would appear -- "strongly disagree about whether, after decades of a freewheeling encouragement of exotic new services and new players like hedge funds, the pendulum should swing back to tighter control."

A real combat?

No no no -- a thousand times no.

The lords of Wall Street fully realize they need to produce another ritual mouthwashing and hot-tub scrub show, to quench ignorant but red-hot helot wrath.

This domestic partners' spat between the two heads is merely to make it look like the new universal reg harnessing about to be fashioned and applied will be forced upon the mightily resisting stubborn know-nothing bad ole boys of lower Manhattan, because it's so full of sharp bits and tight cinches that once on and under firm weeble rep guidance -- why, the cuffs'll never ever again traduce aunt rentier.

To get a notion of what's in store for us, I suggest we all reread some prog hip version of the life and fast times of Nelson Aldrich Carter Glass and the origin of the Fed.

We all know, by now, that we live in a nation that has a fast-disappearing industrial platform. Once the home of a mighty factory system, the envy of all the world, we now must now live off Asian-sourced industrial imports, and buy them with what amounts to trade credits no less, while more and more good domestic jobs and high wages simply roll off a cliff into the Pacific ocean, to wash up on the other shore.

My fellow Americans, welcome to the world that James Earl Carter, the Wotan of the peanut belt, brought us.

Yes, 'twas during the watch of a Democrat the fatal blow was struck -- a member of the party that rescued America's production system from its own financial toxins 'way back when Johnny "air pirate" McCain was still shitting his short pants.

Recall the one piece we collectively retain from back then, at least in our mainstream media's living memory -- the age of wild, raging, highball express, wage-push inflation. By the midterm fraggulation election of '78 it was very very clear to all us prudent Dembots that something had to be done.

Conventional answer: apply the credit brakes, and the credit brakes wrre duly applied.

But did we really need to? Could we instead have engineered a systemic morph -- a breakthrough? Instead of the heavy dose of good old cod liver oil we got, could we have actually instead morphed the system, sublated the bidness world as we knew it, and headed off toward a far far better place and time?

In any case, we didn't. We got the Volckerdaemmerung and the rest is but a gathering plebian misery.

At left, our boy, tall Paul, the master of the pythonic credit hold, right there in a group shot of hi-fi regulators taken not too long ago. He's the big one in the middle, next to Alan of Green Bubbles.

Take a moment to savor his oafish countenance. This bastard put our credit system into the most vicious figure 4 submission hold in post-New Deal American history.

Deepsighted as usual, Father Smiff dubbed him Fafner, the giant co-builder of Valhalla, and eventual dragonic keeper of the golden Ring. Indeed Volcker's tale has a Wagnerian similitude to it -- not like that long-measure, open-measure, Rhine-flows-on theme at the beginning of Das Rheingold. More like the the ring of ten thousand sledges or whatever it is in this case(*), blamming away at industrial America, hammering it into a million shivers -- but I digress. My real point is quite anti-Wagnerian.

We at the time had a shrewd dwarf, Abba Lerner, shown left, with a very big and complete answer to our inflation rampage. If Jimmy had only listened to him, instead of allowing that jumbo Princetonian dolt to crush the dynamo out the then spiraling wage/profit race up the price pole, and slam it the age-old way -- with a hard-money credit constriction so tight it knocked the pips out of tumbling dice in Las Vegas and brought on, with the inevitablity of a Teutonic curse, by the intricate concatenation of its own internal workings, the doom of American manufacturing.

But the very different and renewing alternative was there for the taking. Instead of destroying industrial America in order to save its ultimately parasitic corporate extraction system form, we could have listened to the shrewd dwarf and rigged up a new-model industrial economy, and in short,fairly cheap order, too -- one able to chug along as before but without what we've had up until now, ever since the Volckerdaemmerung -- a dispensation full of technical moth-holes and periodic policy-driven brownouts and, most of all, just what the shrewd dwarf most wanted to end, our chronic underutilization of our productive capacity -- a state of affairs so costly in lost output, it puts off our planet's return to Eden for a millennium perhaps.

The hero of this opera is one lord NIARU -- the "non-inflation-accelerating rate of unemployment," which sometimes calls itself the "natural" rate of unemployment, though there's nothing natural about it.

We can notice it. It's spectral, apart from the Fed's fearful fingerpointing into the void ahead and doomstruck cry of "Watch out! Unemployment is getting too low! Wages are about to take off unless we --" Crunch!

Year in and year out this unemployed reserve -- this pit of shit under the job tree -- produces a drag on output -- on broadly based prosperity. Dare I say it -- for the majority of us, it's a drag on the pursuit of happiness itself.

The system supposedly demands this of us all, in order to curb its own inherent tendency toward a wage/profit spiral, a sudden cobra out of the basket act, waiting just beyond X% of unemployment. For the avoidance of this, we accept serious "secular production slack" -- millions of idle hands and thousands of idle machines -- as if it were a technical limitation of any flexible innovative production system.

But if Jimmy'd listened to dwarf Abba back then -- a dwarf much nicer and more benign than any in Wagner -- we coulda ended all that, and even more wonderfully, ended all the episodic doses of RJD (rapid job destruction) required to curb the wage and profit slingers' appetite for a raise ever since.

"Natural rate of unemployment!" This phrase gets me very steamed. One time in the late 90's, skipper Greenglue actually took us down below the taboo limit. Why didn't we see it as the moment a weird corporate-imposed self-serving superstition burst apart right before our eyes? No, it was treated as a flukey miracle, later explained by the vagaries of this spectre's shifting taboo zone. It wasn't a parting of the Red Sea, but almost as kewl for those of us looking in at it.

It's quite amazing to me how most of the time we don't even notice the waste of all this non-production, this missed output sacrificed to the integrity of "the corporate system". And it's even more astounding to me how on the few occasions when we do stop to notice, we act like a 60-year-old man suddenly noticing the effects of his chronic fatigue syndrome and calling it "just my age".

---------

*That would be the Nibelungs' leitmotif on the descent to Nibelheim, Owen. See below. -- Ed.

Check this out from O-bomb-ya:

"Mrs. Clinton's opponent in the race for the Democratic presidential nomination, Senator Barack Obama, said in an interview that the welfare overhaul had been greatly beneficial in eliminating a divisive force in American politics."

http://www.truthout.org/docs_2006/041108N.shtml

What a tool! Yeah, welfare was the "divisive force" and not the corporate assholes using racist smears about "welfare queens" (never mind that corporations and CEO's are now and have always been the biggest welfare queens around).

"Before welfare reform, you had, in the minds of most Americans, a stark separation between the deserving working poor and the undeserving welfare poor," Mr. Obama said in an interview. "What welfare reform did was desegregate those two groups. Now, everybody was poor, and everybody had to work."

So say my friends the Ralph raiders:

"The corporate liberal media continues to give the cold shoulder to Nader/Gonzalez.

Case in point-New York Times columnist Paul Krugman.

Last month, Krugman was looking for a presidential candidacy to take on Wall Street.

He ran down the list and found Senators McCain, Obama and Clinton lacking.

But he ignored Nader/Gonzalez."

Paul K is a dembot, for sure, and, one guesses, an anti-spoilercrat as much as the next politics-of-the-possible type. But does that make him a corporate liberal stooge?

It does blinker him. Note this blog post from the great man:

"One thing that doesnt seem to have gotten much scrutiny in the bitter controversy is the suggestion that the past 25 years have been an era of continuous economic hardship for the American heartland. If were talking about the decline of industrial cities, there's some truth to that picture. But if were talking about incomes and employment, the Clinton years were pretty good for middle-income Americans and especially good for middle-income Midwesterners....

Did people feel that the Midwest was booming during the 1990s? Yes. Here's a link to a 1997 paper from Economic Perspectives titled Reversal Of Fortune: Understanding the Midwest Recovery.

In fact, it was the malign neglect of the dollar's forex value, even as it subsequently rerose to toxic heights in the late 90's, that did the dirtiest deed -- and of course that was by the Dembot Rubinomicals.

Just as both the rupee and rmb -- after the '97 Asian currency crackup -- started a serious commitment to a long-run lowball dollar-peg policy -- and at a then insanely out of whack exchange rate -- the dollar itself began to rise too far and too fast against the Euro and Yen and other northern currencies. It was a double whammy.

Hell herself could contrive no worse fate for our industrial heartland than the global strong exportable dollar ambitions of Wall Street's premier jackasses Bob Rubin and Larry Summers.

But this is not the lesson dutiful Paul draws:

"I'm not trying to boost Hillary here. Even from his own point of view, it's just crazy for the likely Democratic nominee [i.e. Obama --ed.] to denigrate the economic record of... the only Democratic president most Americans remember."

"You can't spend the better part of two decades campaigning for NAFTA and PNTR for China, and then come here to Pennsylvania, and tell the steelworkers you've been with them all along." Fair enough. But he goes on:

"Not every job that has left is coming back. And not every job lost is due to trade automation has made plants more efficient so they can make the same amount of steel with few workers. These are the realities.... The truth is, trade is here to stay. We live in a global economy. For America's future to be as bright as our past, we have to compete. We have to win."

Win? Yes, but who wins, Obs, who? The transnat big boys and their rentier ragtags, or the broad flow of domestic wagery? Obbsie is ready for that one:

"If CEO pay keeps rising, while the standard of living for their workers continues to decline, that's not a win for America.... For America to win, American workers have to win, too."

More, Obs, more more more. Some clarification. Some detail. Some goddamn 'hows'. But this is the best we get:

"Any trade agreement I would support [must] contain real, enforceable standards for workers.... I believe the Permanent Normalized Trade agreement with China didn't do enough to ensure fairness and compliance. It's not just that China is following the path taken by so many other countries before it, and dumping goods into our market while not opening their own markets. It's not just that they're violating intellectual property rights. They're also grossly undervaluing their currency.... That's unacceptable. That's why I co-sponsored the Currency Exchange Rate Oversight Reform Act. And that's why as President, I'll use all the diplomatic avenues open to me to insist that China stop manipulating its currency."

Me, I prefer "instead".

UPDATE: YouTube has apparently been supine and compliant enough to remove the video from their site, but you can still watch it at 23/6.

His latest gem:

"growth in the global economy encourages the development of stateless elites whose allegiance is to global economic success and their own prosperity rather than the interests of the nation where they are headquartered."

The swine has an unblinking insight into boardroom evil, and a shrewdness and delight in viciousness that blinks at no corporate horror. He's like Doc Benway, hurling a scalpel into his patient's chest just to make the operation more interesting.

Hell, he's the Arnold Ziffle of Wall Street--

-- the closest thing they got to an on-retainer genius.

By the looks of him alone, I ask you, ladies and gentlemen of the jury, how could the likes of this this, this... think-tank porcupine ever hope to bust apart the trans nat-OITP(*) ring's all-in, full-tilt, take-no-prisoners attack, which is even now preparing to apply ten thousand wrecking balls to whatever still remains standing amidst the rubble of our national industrial platform?

I know, I know. Once again, I've prefered the rude senseless personal insult to the principled, documented, text-based dismantling of the argument. So okay, read this, and particularly this flapping burlap of a finale that Maestro Scott substitutes for the much-needed roundhouse left:

"The countries whose currencies are in the OITP index account for roughly 59% of the current U.S. trade deficit.... OITP's relative stubbornness is problematic for United States and global adjustment and makes strengthening currencies in the OITP index and the Japanese yen even more important for correcting the U.S. trade deficit."

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(*)The Other Important Trading Partner index. Its member currencies: China, Mexico, Saudi Arabia, Malaysia, Thailand, Korea, Russia, Taiwan, Indonesia, Israel, India, Philippines, Brazil, Colombia, Chile, Argentina, Singapore, Hong Kong.

Here's a report from the watch out for Larry Ziffle team:

Recently our guy took a malign thumping from three Hindu gents. Waxing to the beat-down, they mocked his status as a globalist and neolib paragon: "Larry are you turning protectionist hack, now we South Asians are getting into the great game too, and we might add, taking a few tricks from you Yanks?"

In fact they get it so all-fired wrong that Larry, in a rejoinder just below their post, makes minced cow of them. In essence: I come to save globalization, not raze it. Here's Larry's money line:

"True friends of global integration and of the developing world will work to design more ways to insure that a more integrated and prosperous global economy is one from which all will benefit."

To reassure The Street, Obama has taken on this willing but dronish-looking orbital of the great Rubinius Maximus:

He is to be "economic policy director". According to brumigin.com,

"Furman, 37, most recently worked as an economist and budget expert at the Brookings Institution in Washington, where he headed the Hamilton Project, an economic policy research group aligned with the Democratic Party that was founded by Rubin, now chairman of Citigroup Inc.'s executive committee."

The Hamilton Project! Mein Gott! Prepare for the absolute worst, folks. Three winters in a row will not be enough. We'll be crying for Andrew Mellon.

For those new to my personal bestiary, this droopy chap's mentor, Bondage Bobby Rubin, did more to destroy industrial America during his 8 years running the world economy, than any man alive, and I'm very much including that unctuous taxi dancer and refugee from the Rand institute, Meister Alan of Greenstain himself.

To the likes of Bobby the Terrible, Alan was but a chittery, thieving temple monkey.

Obama: NAFTA not so bad after all
The Democratic nominee, in an interview with Fortune, says he wants free trade "to work for all people."

WASHINGTON (Fortune) -- The general campaign is on, independent voters are up for grabs, and Barack Obama is toning down his populist rhetoric - at least when it comes to free trade.

In an interview with Fortune to be featured in the magazine's upcoming issue, the presumptive Democratic nominee backed off his harshest attacks on the free trade agreement and indicated he didn't want to unilaterally reopen negotiations on NAFTA.

"Sometimes during campaigns the rhetoric gets overheated and amplified," he conceded, after I reminded him that he had called NAFTA "devastating" and "a big mistake," ....

Obama's tone stands in marked contrast to his primary campaign's anti-NAFTA fusillades....

In February, as the campaign moved into the Rust Belt, both candidates vowed to invoke a six-month opt-out clause ("as a hammer," in Obama's words) to pressure Canada and Mexico to make concessions....

Now, however, Obama says he doesn't believe in unilaterally reopening NAFTA.....

Obama also reiterated his determination to be a tougher trade bargainer. "The Chinese love free trade," he said, "but.... It's no secret they have consistently encroached on our intellectual property and our copyright laws.

One chap in public torment over this is our old friend and Bush-basher the ever-beaverish merit badger Paul of Princeton. The Krug-man cometh and goeth on this one -- in fact over and over again he cometh and goeth.

Here's a recent such effort:

http://krugman.blogs.nytimes.com/2008/06/23/speculative-nonsense-once-again/

In this one, he sez twice he ain't got "no dog in the hunt". And nope, he doesn't. But he sure gets himself into a fix as he tries to rationalize what appears to be monstrous, and in the process looks like a man chasing a greased pig -- across an iced-over pond.

Krug believes by all thats logical and Marshallian and taught at MIT that this huge price soar ain't from tampering, ain't from the dark arts of the corporates and fundsters at work. Can't be! He's Dr Pangloss without even knowing it. All's well that ends well in the best of all corporate markets

Oh hell, why do I bother to lampoon the Paulmeister? The truth is, nobody with a PhD in economics has a decent model of pricing -- for oil or electricity or corn or interest rates or doctors' fees or anything, really, other than abstract widgets. Nobody understands prices in the world we all actually live in.

But one doesn't have to be an Ivy-trained Marxian attack economist to have one's suspicions. Don't we all, if we're not drunk on conventional wisdom? Any fool can see something ain't quite right, eh?

So how do guys like Paul get to where it's all "spontaneous and to be expected maybe grim but natural and transitory and on the yellow brick road and blah blah blah"? Unless it's demonstrated to be the exclusive doings of the Other Team, aka the GOP, Paul's standing up for the orthodox tower troll calmative -- which is? In the long run we'll all eat cake.

That brings me to the other classy set of smug hand-sitters, you green-aholics -- you shits just love these higher prices -- am I right?

For obvious reasons, I suppose -- you don't so much care who's pocketing the windfalls, like I do, just so long as the sky high pump charges reduce hoi polloi's consumption -- right? I mean down the road when Mr and Mrs Below Average IQ buy the next four wheeled planet stinker.

Yaah, great! Thousand dollar oil with 980 dollar profits! Lets give our blessed mother planet and her exiguous dime-thin atmosphere a chance to recoup its life-sustaining freshness.

Ahh!

Well, not really.

May I suggest this line of reasoning to you green goblins to munch along with the morning latte? You want reduced consumption of oil -- fair enough; but you're great believers in some variant of wealth as equal as possible too, aren't you?

Now you guilt-drenched strivers, then ask yourself this: Is there today a long run real price of crude that maximizes the rate of adjustment? And if there is -- if there's a price beyond which we're just shooting extra superfluous cash at the corporate swine -- then are we at it, above it, or below it?

I say we're above it, cellmate -- well above it. And I say remember the little folks. Don't we need to factor out any global economy-wide slowdown effects on total consumption these hypothetical uber-plus price hikes might lead to? Shouldn't starve-the-beast strategists avoid setting up a a regular-guy deparment? Even Malthus had his limits. In other words: the income effects on total household consumption of everything including oil need to be compensated, don't they?

As the late Sir Johnny Hicks might say: to substitute is divine but to consume is human.

Here's a brief overview of Johnny's nice distinction.

To cut to the chase: just what might the crude price be that would maximize the adjustment rate? My guess: 60 to 80 dollars oughta be more than enough to sustain the development and production of alternative sources of energy. Anything higher is pure windfall -- a serious production of pleb-prole misery gone to waste.

The donkeys bray with glee "this one's for you, Mr and Mrs Little Schmuck." Obviously there'll be a virile override of any staged POTUS veto -- the tower trolls know their Bismarc. Fortunately for the job system's unofficial management class, odds are this correction will remain at a pace below freak-out velocity -- and yet....

Ahh, so what if we're back to a job force the size of the one we had last year at this time. Things move so slowly these days. But then again the next six months might see this pace swiften. The ability to plow under jobs, even in good times, is quite impressive -- at least it always impresses me.

Gross job loss from all sources -- quits, fires, layoffs, liquidations, retires, etc. easily can run up into the two million range each and every month. 25 million jobs reaped away, every year

Imagine if the system simply stopped replacing us dispensables. Why, off the solid 5% base we got now, in just a year's time we could reach 21% joblessness. Soup lines! Hoovervilles! Dance marathons!

See how kind these corporations are, taking us in like they do. It's always possible they might not.

Back to the here and now: it takes a net 100k new jobs per month to absord all the entrants and re-entrants into the marketplace. A quick calculation tells us if we're down absolutely by 450k since last December, and if we add in 6 months' worth of these missing 100k shiny new opportunities, then we discover -- as the great Krug did today -- we're, yikes, a million jobs short.

Will the job market's current doldrums spell electoral doom for Hanoi Johnny? Is he suitable for framing as America's latest job drought Judas goat? Is that alone enough to once again shoot down the air pirate? _

"Unfortunately, no one, certainly not in Asia or the US, seems willing to bite the bullet and help engineer the necessary co-ordinated retreat to sustained sub-trend growth, which is necessary so that new commodity supplies and alternatives can catch up."

That's Harvard's own Kenny Rogoff, who wants to slow global growth by any means necessary -- because prices are rising too fast. Right now, sez the kenmeister, "governments are clawing to stretch out unsustainable booms... Getting the diagnosis right is the place to start. The world as a whole needs tighter monetary and fiscal policy."

Let's pass by this odd conflation of diagnosis and prescription. As far as cures go, this is the purest kind of allopathic fools' poison. Advice like this breeds cures more sociopathological by far than the social pathology it's alleged to cure. The remedy for a boom -- trigger a bust. Sound familiar?

It's the top-shelf kill cure made at least nationally famous by Paul "submission hold" Volcker back in the Carter/Reagan years. But hey, Kenny wants to go global with it.

See, Kenny means by "sustained sub-trend growth" an earth-wide figure-four financial hog tie. After that euphemism, try on this for pop speak:

"The historic influx of new entrants into the global workforce, each aspiring to western consumption standards, is simply pushing global growth past..."

"the safety marker on the speed dial."

The real heavy here is that vastly overrated Mr Nasty, accelerating inflation. Heaven forbid the oppressed bond holders of planet Terra take some real value losses through unanticipatedly swift price level change.

Bust through this mental barrier about paper wealth being king, and we might just morph into a new age of sustained super above-trend growth. Now wouldn't that be awful?

What's not to like, you say? Well, "Ninja Zombie," one of Mark's commenters, offered this confident piece of under-a-toadstool Ubermensch nonsense:

I'm not sure this is necessarily a good idea... The inequality in productivity between people is huge, often much larger than the inequality in wages.

One example:

I spent a month recently building an OCR system, which replaced some data entry people. My productivity is about 216x that of the data entry guys: a system I built in one month does the work that 18 people do in a year, and 18*12=216. My wages are only about 7x the wage of a data entry guy.

It all fits together so well, given the vast and persistent attempt in the media to misdirect any discussion of our fast and furously polarizing household incomes gap. The official story is that the basis for the gap is changing -- away from property income versus work income, to growing differences in the rewards of different levels of skill, talent, effort, training, etc.

Add to this an alleged iron law of technical progress -- a "long-term innovational tilt" away from creating more skill-less jobs and toward ever greater demand for more-skill jobs. That is, innovation itself supposedly requires ever more skill-intensive employments, and our global path forward implies magnified differences between various jobblers in the "market value" of their hours of hired-out toil.

Hmm. You got a problem with that, Paine?

I do. No such iron law exists. In fact, the net is probably the other way. And even if there were such a tilt, it won't govern job compensation.

Let's use Herr Zombie's anecdote. His reasoning displays not only a lack of empathetics, but an even smaller dose of actual economics. Rule One in a market system exposed to even the most imperfect of competitive winds: The reward to the inventor of any productivity enhancement is almost never in line with a full compensation for her innovation's incremental welfare impact on its ultimate beneficiaries, its users. All master Zombie's innovation could do is lower the relative product price commensurate with the total reduced labor costs -- and even that's only if the inventor actually owns the rights to his innovation. In this present corporation-dominated regime, where even brains like Zombie's here are hired out to the tower trolls, what the marketplace -- smart or dumb as it may be -- ultimately rewards is the owning corporation, through said corporation's various rent traps and other market bending methods. That is, whatever rents the corpration is able to retain in the form of higher margins and isn't forced to piss away in lower prices, goes to the corporation's owners and top managers, not -- not -- not! to the jobbled geeks, not to hired pus-heads like undead office toon Ninja here.

What's Ninja worth -- ultimately? He's worth what his replacement fresh out of programming school over at Torpedo Tech in Bangalore might cost his corporation to hire.

From the New York Times:

Obama Aides Defend Bank’s Pay to Biden Son

During the years that Senator Joseph R. Biden Jr. was helping the credit card industry win passage of a law making it harder for consumers to file for bankruptcy protection, his son [shown above -- Ed.] had a consulting agreement... with one of the largest companies pushing for the changes....

Mr. Biden’s son, Hunter, received consulting fees from the MBNA Corporation.... [A] company official had once described him as having a $100,000 a year retainer....

The financial services industry began seeking relief from Congress in the mid-1990s from an increase in bankruptcies that was cutting into its profits.... [E]xecutives at MBNA... began donating heavily to both major political parties and many national politicians, including Mr. Biden.

In late 1996, the company hired the younger of Mr. Biden’s two sons, Robert Hunter Biden... who had just graduated from Yale Law School.... The company promoted Mr. Biden to senior vice president by early 1998....

Travis Plunkett, legislative director of the Consumer Federation of America, a consumer group that opposed the bill, said that Senator Biden had provided a “veneer of bipartisanship” that eventually helped the credit card companies win over other Democrats. “He provided cover to other Democrats to do what the credit industry was urging them to do,” Mr. Plunkett said.

Aides to the Obama campaign said Sunday that Senator Biden’s goal was always to strike a workable compromise between the competing interests on the bankruptcy bill....

MBNA employees have given Mr. Biden more than $214,000 in campaign donations over the years, the largest amount in his coffers tied to any single company. But the company’s employees have given even more lavishly to President George W. Bush and top Republican lawmakers.

I ask myself, how long, oh Lord, how long can the little folks stifle their outcry over all this majestic wet rot? What part of 30 years of going nowhere don't we geefs and geefettes understand? Just take a look at this latest "lame duck" job-class report card, drawn up by the perenially indignant double-dome strivers down there at the beltway's "for the greater googoo" policy institute.

No, on second thought, don't read it. You'll just be told what you already know. But for a few twists, any one of us could have written it umpteen times in the last few decades.

The gist: the vast middle reaches of the American wage class are taking the slow boat to shitsville. There's some interest in a few details -- for example, for months now our corporate tower trolls have seen fit to compact more small-potato opportunities then they've creating. And no, we haven't been in a jobs recession or for that matter gone through a full economic cycle and ended up worse off than before it started. Gotta go back pre-dustbowl to top that stat.

So us poor buggers aren't marching on Washington or up late nights burning silk hatters in their pajamas.

Look at it this way: thirty years of class war takes its toll -- at least on the losers, and their confidence in themselves.

I've been goin' down so long now, junior -- it's startin' to feel like I ain't exactly destiny's child....

I really wouldn't have thought that anything could make me proud of the US House of Representatives, but yesterday's stunning rejection of the bailout bill certainly did -- no thanks to the Democrats, who voted for it 140-95.

All the experts and wise men were for it -- the Waxmans, the Franks, the Rangels. In fact anybody with a safe seat was apparently for it. The people who bolted were the people who don't take their re-election this fall for granted -- in other words, the people who had to listen, however unwillingly, to what the public was saying.

For the experts, deeply invested in their knowledge of the arcane institutions of finance, a threat to those institutions is a threat to civilization itself. Apparently the public, however, doesn't grasp just how indispensable these institutions are. I'm with the public on this one.

Comrade Owen understands these matters better than I do, so I asked him about it. His take:

The returning mariner immediately chivy-ed me with "meltdown" questions:

"Just what would be so terrible if we let all these bankrupt institutions evaporate? -- Nobody to lend to solvent businesses any more? But surely that's nonsense -- the Fed could do it directly if need be, no?"

Yes indeed, if Uncle stands ready to put the whole corporate economy (globally) on a new "artificial" gubmint hi-fi vascular system. The chaos would be temporary and the damage to organizational momentum among our production outfits minimal. Boldness to the max of course would be de rigueur. Damn the glitches and full speed ahead -- anything less would yield unnecessary losses of real output.

Warning, Will Robinson! Warning!

Yes the commanding heights are right there within Uncle's grasp. he has all he needs to get on with it. But need I notice a jilted Wall Street gathering herself on her Manhattan Laputa, ever ready across the Rhine -- like any deposed ancien regime, preparing her vicious pounce at even the slightest wobble or uncertainty on Sam's part.

Obama got the fire in his belly for the likes of that? I mean do he look like this guy to you?

The black man who straight-armed Wall Street. Hmmmmm.

"Once a bank in a given town shut its doors, all the knowledge accumulated by the bank officers there effectively disappeared. Other banks weren’t nearly as willing to lend money to local businesses and residents because the loan officers at those banks didn’t know which borrowers were less reliable than they looked. Credit dried up."

And just who's this particular idiot? Some virtual cat burglar from the business pages of the New York Times. Behold his electrified hair act as he, like his other "fellow worriers.... connect[s] the dots... to teach a little lesson on the economics of a credit crisis — how A can lead to B, B to C and C to Depression".

Ahh comrades, he's but one idiot in a chorus of idiots -- a chorus of idiots headed up by a string of distinguished lead soloists, including double-domed faux-Nobel laureates and eminent tycoons and tower sharks -- all peddling the purest brand of hooey.

These days we're getting fed nothing but a steady diet of bull goose feathers -- policy as the illusion of the impossible. What we need is a Huey Long manic boast -- a kingfisher, a dealer in miracle loaves. But we get what? We get who? Why none other than Gentle Ben Bernanke -- our livid-faced soul-sapped fed chair from old Nassau itself.

Seems Ben is in fact a former scholar of the great depression:

"As a young academic economist in the 1980s, Mr. Bernanke largely developed the theory that the loan officers’ lost knowledge was a crucial cause of the Depression. He referred to this lost knowledge as “informational capital.” In plain English, it means that trust vanished from the banking sector."

If you want to think it through, try starting with this notion: activating idle resources has zero opportunity cost. If the Gub runs a big enough deficit, spends enough money, extends enough easy business credit -- well, why not? Credit costs nothing to produce, and credit is the elixir, when it flows, even indiscriminately, into our mazelike thicket of real tangible product businesses, our outfits that hire folks and put 'em to work producing actual consumable shit.

Yes they do it for for a profit and through exploitation -- but ain't it a cold existential fact that a job, any job, is better then no job at all?

Is it all a big waste? Wasting what? A bridge to anywhere built out of otherwise idle resources, no matter where it's going, no matter how marginal its additional social value -- it's better then ten thousand pairs of thumbs twiddling away on La-Z-Boys.

Fuck the fine structure, fuck "all the knowledge accumulated" by the Mr Potters everywhere. So what if "banks are hoarding capital"? We the weebles don't need their stinking capital. We got plenty of capital, social capital, capital of Uncle, from Uncle and by Uncle, and it can get spread out free of charge.

So gang, tell Uncle to start doling out the credit lines all up and down Main Street. Fuck the Rubins and the Reeds.

Fuck the Potters. Pass 'em by. Pass all of 'em.

Go to the source and fill all those greedy little hands out there ready to rumble the marketplace -- fill 'em with cash. Let America's eager grasping legion of petty for-profit outfits seek their petty fortunes out in the forum battling for orders against each others grain. Let 'em sell more I-phones. Let 'em build more sundecks and cut more blue hair. Let 'em rip and swindle and and serve more restaurant meals. Let 'em -- even if they're only in it for the money -- half-assedly care for more elders and raw kids. Let the markets roar. Let a zillion firms contend. Let's try some of this guy's snake oil for once:

Once again the Democrats -- those dedicated fans of hedge-fun genius -- led the charge. Monday's rejection of the bill saw a Dem vote of 140-95 in favor. Calls from Barack (among other things) boosted this margin, today, to 172-63. The Republicans, who opposed the bill on Monday by a quite lopsided margin, experienced some erosion due to relentless pressure, but still honorably gave a majority "nay" -- 108-91.

The professional thumbsuckers have pondered this development, of course. Here's the Washington Post:

[T]he change from Monday's vote to today's tally is clear: The number of Republicans voting for the bill went from 65 to 91, and the number of Democrats in favor from 140 to 172. Those increases are attributable to four main factors: 1) Monday's 778-point plunge in the Dow, which spooked many lawmakers; 2) The apparent swing in public opinion after the initial defeat; 3) The addition by the Senate of several expensive goodies, including business tax breaks, an increase in FDIC insurance on bank deposits, and mental health parity legislation; and 4) The hard work of leaders on both sides of the aisle to coax more members into the "aye" column.

The "apparent swing in public opinion" has no link in the WaPo item -- because of course there was no such swing. Earlier today Steny Hoyer optimistically observed that phone calls to his office were now only 3-1 against the bailout -- as contrasted with 6-1 a few days earlier. Always look on the sunny side, Steny. And ignore your constituents -- 3-1, 6-1, schmix-to-one, this is Wall Street we're talkin' about here.

The WaPo piece interestingly continues:

Vulnerable lawmakers, with very few exceptions, did not switch their positions, still voting overwhelmingly against the bill....

[T]here are 44 incumbent House members who face notable challenges in the November, ranging from contests that are potentially competitive to those that are very tight. Of those 44, nine voted in favor of the rescue bill on Monday. Today, 12 vulnerable lawmakers voted aye, meaning that just three switched their votes -- GOP Reps. Randy Kuhl (N.Y.), Joe Knollenberg (Mich.) and Jean Schmidt (Ohio).

All the other vulnerable members stayed in the "no" column.... [W]hile 60 percent of the House backed the rescue today, just 27 percent of the members worried about the November election did.

Sometimes you know whats comin' and you just gotta brace yourself:

Tentative cheer: Paulson may have been dragged kicking and screaming into doing the right thing to rescue the financial system.

So now Uncle's goin' partners with the mugs -- and the people's elite friends are delighted. In greater deeper pwog-space it's all about properly managing the bail. Like in this case using the "Swedish model" -- where Uncle makes an equity play and gets a little upside potential on his dime.

Okay, so that's better than just transferring the toxic shit onto Uncle's books, and full-face dollars to the Street creeps. But look, gang, whatever the form here, the headline still reads: WALL STREET HEGEMONY SAVED! Orthrian two-headed rule means any real bypass operation shall not pass.

Oh, and that "Swedish model"?

The original equity bail in Sweden circa 92-93 was a pure lemonade maker. Only sick-ass banks got bought into, and run from the gubmint corner office.

Jacob Wallenberg, the curly-topped super-saurian in the silk suit above, a man of means and global connections, got to keep his private bank all to himself.

Here's another nice turn, from another pwog who has ideas about "managing" the crisis. The Mephisto-like Greg Mankiw sez, in effect, that yup, equity from Uncle is the only way:

"Other economists have suggested that the government inject capital itself. That raises several questions. First, which firms? The government does not want to put taxpayer money into “zombie” firms that are in fact deeply insolvent but have not yet recognized it. Second, at what price should the government buy in? Third, isn’t this, kind of, like socialism? That is, do we really want the government to start playing a large, continuing role running Wall Street and allocating capital resources? I certainly don't.

Here is an idea that might deal with these problems: The government can stand ready to be a silent partner to future Warren Buffetts.... Whenever any financial institution attracts new private capital in an arms-length transaction, it can access an equal amount of public capital. The taxpayer would get the same terms as the private investor. The only difference is that government’s shares would be nonvoting until the government sold the shares at a later date.

This plan would solve the three problems. The private sector rather than the government would weed out the zombie firms. The private sector rather than the government would set the price. And the private sector rather than the government would exercise corporate control."

Remember the story a week or so ago about Richard Fuld, the helmsman who ran Lehman Brothers on the rocks, getting punched out in the company gym by a disgruntled employee? J Alva Scruggs sent in the following reflection:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3150319/Richard-Fuld-punched-in-face-in-Lehman-Brothers-gym.html

If that URL breaks, I've got a custom one that works well for this.

http://tinyurl.com/nozick

This offers a classic proof of Nozick's theory on entitlement. The punch was freely transfered and justly acquired. The punchor delivered the punchee's compensation without any coercion from the state. He mixed his labor with it -- and it was a resource that previously had no owners. Indeed, before the punchor clenched his fist and swung, the punch did not exist. Immaculate, pure and wholly free of liens. Therefore it was his to give. The punchee demonstrated his acceptance by assuming a recumbent position, again without coercion from the state.

http://www.guardian.co.uk/commentisfree/2008/oct/16/useconomy-usa

Seems according to cousin Joe Stiglitz, Paulson and posse are short-sheeting the "taxpayers":

"For all the show of toughness, the details suggest the US taxpayer got a raw deal. There is no comparison with the terms that Warren Buffett secured when he provided capital to Goldman Sachs. Buffett got a warrant-the right to buy in the future at a price that was even below the depressed price at the time. Paulson got for the US a warrant to buy in the future-at whatever the prevailing price at the time. The whole point of the warrant is so we participate in some of the upside, as the economy recovers from the crisis, and as the financial system starts to work."

Aaah we need a new broom in Washington eh? A broom to sweep away these Street creepers:

But here, I'm afraid, is what we're likely to get instead --

Enter Obama on an ass indeed, and to loud hosannas -- from the money-changers.

Time to build ten thousand digital shrines to this new world sage, Bill Vickrey. In spite of the disreputable distinction of winning the economics pseudo-Nobel, on the three big battle fronts of the global klass krieg -- jobs, inflation, and deficits -- Doctor Bill was peerlessly fierce and fearless.

In particular, he was a good deal bolder than, for example, that impish Mephisto, Harvard Yard's own Mitt Romney advisor, Greg Mankiw. Greg tut-tuttingly quotes Vickrey:

Deficits are considered to represent sinful profligate spending at the expense of future generations who will be left with a smaller endowment of invested capital. This fallacy seems to stem from a false analogy to borrowing by individuals. Current reality is almost the exact opposite. Deficits add to the net disposable income of individuals, to the extent that government disbursements that constitute income to recipients exceed that abstracted from disposable income in taxes, fees, and other charges. This added purchasing power, when spent, provides markets for private production, inducing producers to invest in additional plant capacity, which will form part of the real heritage left to the future. This is in addition to whatever public investment takes place in infrastructure, education, research, and the like. Larger deficits, sufficient to recycle savings out of a growing gross domestic product (GDP) in excess of what can be recycled by profit-seeking private investment, are not an economic sin but an economic necessity....

[W]hat I would like to see is a budget deficit of about $500 billion averaging for the next five years, until we get from 5 percent unemployment down to 1 percent unemployment.

Was Vickrey a kook? Advocating $500 billion deficits in 1996 certainly sounds kooky. Correcting for inflation and real growth, that would be about $800 billion today.But no, he was not a kook: He was one of the last hard-core Keynesians, far more Keynesian than so-called new Keynesians like me....

Now Wild Bill's schemes might not pass a thorough audit, at least as laid out in pop lingo here; but as cautiously glossed here, the full force of his vision brought down to us from the mountaintop is vastly understated.

Citizen suckers, hear this: we could run up cumulative federal deficits in excess of 10 trillion dollars over the next four years, and be fiscally poised for the future, just like we were at the dawn of the cold war.

$10 trillion... that's what Obama could borrow in his first term, and end up making us all better off than we were when he arrived at the White House.

So... what to spend it on?

As some Chinese red mandarin was quoted in the press recently -- we gotta spend it "fast" and with "a heavy hand".

But here's the real point: the best and fastest first shot would be not to spend it at all, but to rebate it: send a check for last years SSI taxes to every payrolled geef and geeffette in this country, and then declare a holiday from the SSI tax till further notice.

It's ours, we earned it, so let us spend it -- or pay down debt, or whatever. Just plain dispose of it any way we want.

Then next we might think of nationalizing the HMO's, like Uncle is already doing with all our big-boy high-finance outfits. Replicate the Paulson/Bernanke/Ribbentrop bailout pact -- but not to the benefit of the silk pajama crowd. Nope. For us -- by socializing the private health insurance industry. Call it single payer by other means.

Once it's partly ours -- get every American signed up to a private plan, and have Uncle pay the first $2000k per head, as social coverage of... well... personal coverage. That oughta get the ball rolling.

Note: This rebate plan is unlike the balance-sheet plugs approach, AKA "bail the big bums out" -- or as Obama all too benignly calls it, "fixing the financial plumbing." Don't matter if it's for the banks, or the insurance companies -- balance sheet injections only benefit us jobblers directly if the pipes leak. Otherwise we gotta pray for lots of so-called wealth effects to lift aggregate domestic expenditures.

Note: anticipating that 5% of upper-crust wealth increase will get spent -- not lent-- is prolly high ...that's as far as wealth effects go.

So if the rich guys behind these faltering hi-fi firms feel restored to former wealth levels, by a trillion or two in bail bonds, then they'll spend maybe ...maybe... maybe... 100 billion more than otherwise.

Not a very high yield, eh? And so far as the "plumbing" goes -- as far as lending goes -- hey, the state of defaults makes lending increases very problematic. The bastards are unlikely to turn the taps enough, any time soon.

Whatever voodoo hoodoo might occur as a result of the series of pain-relieving Paulson corporate injections, a direct rebate to wageling households, of taxes extracted to begin with right out of their own work earnings, will hit the real economy -- the one that makes real products -- much harder. And more importantly, resurrect the job force levels much much faster. It's a virtual WPA, folks -- bootstrap macro at its finest. In fact, if the household expenditure wave is big enough, in about two or three years, when we finally have the plans for our green lean and clean sustainable production machine, we oughta see such hyper-employment conditions, and such a real wage spiral under way, and such a production capacity squeeze that... it'll knock the pips off the dice in Las Vegas.

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Next post:

General product inflation is ripe for a harness. Enter the markup cap-and-trade system -- to end price pollution in our time.

"The main thing to realize is that for the time being we really are in an alternative universe, in which nothing would be more dangerous than an attempt by policy makers to play it safe"

In the blog post from which this morbidly panicked line was culled, there is also this:

[Goldman Sachs] then turn to an estimate of likely changes in the “private sector balance” — the difference between private sector saving and private sector investment. And it’s stunning:

The GS house price forecast combined with current equity prices and credit spreads implies a rise in the private sector balance from +1% of GDP in the second quarter of 2008 to +10% in the fourth quarter of 2009 -- a rise of 9 percentage points, or 6 points at an annual rate.

Yes, Virginia, we're headed down a continent-wide rabbit hole -- unless, that is, our dear ole Uncle Sawbuck, the stricken cyclops of planet Earth, takes some super-bad, mighty bold and bodacious countermeasures, and takes 'em pronto.

Again St Krug:

"What’s the answer? Huge fiscal stimulus, to fill the hole. More aggressive GSE lending. Maybe a “pre-commitment” by the Fed to keep rates low for an extended period -- that’s a more genteel version of my “credibly promise to be irresponsible.” And maybe large-scale purchases of risky assets."

Note on the relative meaning of "huge fiscal stimulus": to Paul it's prolly on the order of 800 bills in increased fedral deficit. Which is piffle, a mere pigeon drop. It might-oughta take us, on highest estimate, and with a tail wind from Asia, if we're extra lucky, and all hits just right -- about halfway across the canyon.

It's summertime, summertime
Sum, sum, summertime... 

Well, no more studying history
And no more reading geography
And no more dull geometry
Because it's summertime

It's time to head straight for them hills.... 
 

Larry Summers may have missed out on Treasury -- thanks, it seems, to his foot-in-mouth dis of the math skills of upper-middle-class women -- but will nevertheless dwell deep in the bosom of Obaham, as director of the National Economic Council: Obama's "closest economic adviser," as the Wall Street Journal notes with ill-disguised and well-justified delight.

The Journal goes on to add:

Mr. Obama has instructed his economic advisers to draft a stimulus that could ... push back planned tax increases on families earning over $250,000 from a planned 2010 start date to 2011....

Essay question, in two parts: (i) In the image above, which party is finding the encounter more painful? Discuss, in particular, the closed and/or narrowed eyes of the figures depicted. (ii) Will they nevertheless manage to suck it up and work together successfully for the benefit of very wealthy people? Justify your answer. (Especially if it's "no".)

Okay, so we're on a doomsday dive toward massive roasted homestead territory. Millions are about to get spit ou