The lost decade

President Obama signed the stimulus package today. By the most optimistic estimates, this bill will push the 2009 federal deficit to $1.3 trillion. That's 10% of the Gross Domestic Product, a level of deficit spending not seen since World War II. By comparison, the Reagan Administration's largest deficit - considered scandalous at the time - was 6.3% of GDP.

Some experts estimate an even higher deficit this year. Taking into account falling tax revenues and the Obama Administration's ongoing, ambitious spending plans, they think the deficit may run as high as $2 trillion. That would be 15% of GDP, an unprecedented amount.

Supporters of the plan say this massive stimulus will revive the economy. They may be right. But Japan tried similar stimulus measures when its economy went south, with little effect. Total Japanese debt rose to 130% of that country's GDP, and their recession dragged on. The prolonged period of stagnation is now known in Japan as "the lost decade."

Are we facing a lost decade of our own? Time will tell. But one thing is clear. The moderates and independents who voted for Obama in the belief that he would govern from the center were deluding themselves. His administration is clearly committed to expanding government spending on a vast scale. We have embarked on an economic experiment fraught with peril; if it fails, as it has in other countries, it may bring us to national bankruptcy.

It appears we are doomed to live out the old Chinese curse: "May you live in interesting times."

Comments

http://mjperry.blogspot.com/2009/02/will-stimulus-become-3-trillion.html

"Only about 21% of the increased spending would take place in 2009, and 38% would be spent in 2010 and 41% in 2011 and after. Let's be optimistic and assume an economic recovery sometime in 2009. There are two conclusions from that outlook:

1. The stimulus package would not be responsible for much of the economic recovery because almost 80% of the spending would take place after the economy has recovered.

2. The majority of the fiscal stimulus would impact the economy in 2010 and after, at a time when the economy no longer needs a stimulus. Stimulating an economy already in recovery would be potentially destablizing."

It looks to me like the government is using the economic crisis as an excuse to spend tax payer money on political pork.

The republicians were accused of favoring their own special interests like oil companies and Haliburton. I can't say I think the current government is an improvement.

[william]

First both parties are participating in a rapid decline of a nation.

Where is the concern for the last stimulus package for the banks and Wall Street? Congress gave them hundreds of billions with no accountability. Nancy and Reid should be impeached for that alone. And to think both presidential candidates voted for it that should have disqualified both of them for president.

Well we know who controls Washington. Congress gave the money to the same CEO’s that had drove their companies into bankruptcy than some gave bonuses to their managers that helped drive their companies into bankruptcy. New corporate jets anyone.

This is a national and constitutional problem not a democrat or republican issue. Change the system, change the country.

As for Reagan economics we all see how well that has worked for the country. Most of the wealth created in the last ten years went to the top 2% of the people. We are losing our middle class. When the middle class goes, so goes the republic, as we know it.

And bailing out the big three, that is like throwing money down the drain. I have had big three auto management at seminars I have taught. They don’t get it period. Let me repeat they don’t get it period. Toyota management could turn GM around in five years.

Few understand this axiom: with communism man exploits man with capitalism it is the other way around. It is Jefferson time in America. I.e. all must go and the system must be changed. One example term limits for congress.

In the end what does it matter has anyone noticed that those on the other side that come through mediums don’t talk politics? Like a non-issue.

Even when we don’t know that we don’t know problems will arise; and when we think we know and we don’t know bigger problems arise. Spiritual laws apply to nations as well as individuals. Best kept secret in the world.

[Zerdini]

“When he to whom a person speaks does not understand, and he who speaks does not understand himself, that is metaphysics. “

VOLTAIRE

[Chris]

But but but how can you NOT WORSHIP THE OBAMAMESSIAH?! He's a very good public speaker and is very hip and charismatic, surely that means he knows how to fix everything?

"Change!"

"Yes we can!"

[Chris]

The only kind of stimulus spending which I can see working at this point would be investment in some form of entirely new technology which has the potential to create new wealth and bring back all the jobs destroyed by outsourcing.

[Craig]

Take that same amount of money, and instead use it to cleave back payroll tax and income tax. Honestly, which do you think would have the greater stimulus effect? Can't find the link, but there is a page up now giving an open letter to Obama signed by truck load of economists saying the plan being implemented is bollocks and that lasting tax cuts are the way to go. Come to think of it, wouldn't this latter strategy reallocate the wealth? Perhaps not in the way one envisaged though.
As to capitalism taking advantage of man, just like socialism. Perhaps. But remember, with the former, you get a vote, in terms of where you spend and invest your dollars. In the latter, those who know better decide for you. And if you disagree, well, you can always be re-educated.

[Michael H]

The moderates and independents who voted for Obama in the belief that he would govern from the center were deluding themselves.

I would be one of these, but I'm not ready to condemn Obama a month in to his presidency. I do agree with the first commenter that Obama made a mistake in delegating this piece of legislation to congress, and ended up with a pork-laden bill which I don't expect to have much stimulative effect.

I tend to agree with David Brooks' piece in the Times last week, as well as Jon Markman's recent post at MSN, who each point out that the real problem has to do with psychology. As Markman put it:

But governments don't know which steps work because economic theory breaks down at the level of human psychology. Given a set of stimuli -- ranging from tax cuts and longer unemployment benefits to new construction jobs and wider broadband access -- economists try to mathematically determine the choices citizens are likely to make, then use the results to recommend a policy mix to legislators.

The problem is that the models often fail to accurately forecast human behavior, and politicians regularly screw it all up by ignoring the data and diverting funds to pet projects. History is rife with successful financial episodes, such as the New Deal, in which luck and coincidence are later misinterpreted as results of prescient planning.

The real issue, as I see it, is that this mess was created by psychological phenomena as well, and very few recognize that. One of the newsletters I subscribe to brought up the fact that if we look at US GDP since 2001 and then back out the money that was created through mortgage refinancing, we discover that we've had essentially no economic growth over the entire Bush presidency. The explosion in the housing bubble led everyone to feel like things were booming though, and "everyone" includes not just the consumers that gorged on credit they couldn't afford. The ones most responsible for this mess are the Ivy League-educated quants and MBA's that decided that it was a good idea to build elaborate mountains of additional debt instruments on top of a foundation of what were obviously suspect loans.

The scary thing, as I see it, is that the aforementioned geniuses did the exact same thing with every other loan pool they could get their hands on. Auto loans, student loans, credit cards . . . you name it. As the economy falters and default rates on these products rise, we're going to continue to see staggering losses - I've read that many of these large investment players leveraged their bets on the derivatives built on top of US consumer credit at ratios of thirty or forty to one. If that's true, then every hundred thousand in defaults at the bottom of the chain leads to losses of three or four million at the top. As those losses mount, the investors are forced to liquidate equity holdings to cover their losses, and well . . here we are. Markman estimates that US consumer net worth has already been hammered to the tune of 12 trillion. I think it's getting worse before it gets better.

I'm not sure what Obama or anyone else can do to stop an avalanche. We may very well see a series of one-term presidents as the system works the excess out. I would expect to see another stimulus package inside of a year, although I'm not certain that will come along before or after it becomes obvious to the administration that they have to nationalize the banks.

We do live in interesting times.

[Michael H]

After I posted the above it occurred to me those who interpret my numerous “mystical” rants about becoming cognizant of their own psychology as having little pragmatic value might be wise to consider this episode. The crowds will continue to engage in their collective insanity, but there’s at least a chance that we can learn to stay out of the way. I sold my real estate in early '07 (for probably 40% more than it's worth today) and my other investments have been sitting in cash as the carnage has unfolded.

Not that I have no concerns - I'm not at all sure what I should be when I grow up, and the mess we're in tends to make anything look perilous - but that's not as immediate as what many others are facing. William’s right that everything will be fine in the end, but that’s not terribly comforting to someone who’s concerned about feeding their kids.

[william]

As the Buddha stated one must find the middle path and as the master stated to George Wright the medium one must find the moderate way. Greed and wealth can destroy a country as fast as power and political ideology.

Finding that middle ground is no easy task if it was every country and individual would have found it by now. A countries political ideology may give us a reflection of much of that countries alignment with spiritual understanding.

Again worth repeating. With communism man exploits man with capitalism it is the other way around.

To confuse socialism with communism shows a lack of understanding of each of these political ideologies. Neither will work at this stage of human evolution as will capitalism. We are witnessing the self-destruction of both communism and capitalism.

Change the system changes the outcome. Instead we blame people working within the system. Easier to blame others than look within our beliefs.

Until we come to know that spiritual laws apply to political systems and individuals countries will hang on to their political ideologies with fierce determination. It took an eleven-year war in Afghanistan to “help” bring the Soviet Union’s imperialism to its knees. We are now seven years into that war in Afghanistan and five years in Iraq. Interesting indeed.

Indeed these are interesting times with interesting feedback but do we always listen to that feedback.

[Robbie]

Im from England and we all had high hopes for him over here. Even though it looks like this stimulus package isn't a good idea it isn't all bad. He finally closed down guantanamo bay, and it seems impossible to know the right solution to this economic crisis.

[GregL]

I'm from Illinois and we STILL have high hopes for him. Hey let's give the guy a chance, less than one month into his Presidency. Seems like everybody is ready to judge and jump on his every move. Afterall, we gave Bush eight years and look at all he accomplished.

[Craig]

In the immediate aftermath of 9/11 how many would or indeed did state, that America would not suffer another such occurrence?
The fact alone that under Bush another such attack did not occur should be lauded. Not, breezily ignored.
As for the whole argument about giving Obama time, this wholly, and quite conveniently, misses the point. When it is raised that the policies being implemented by the one, have been tried elsewhere with disastrous effect, it beggars credulity that supporters adopt a position whereby this fact is completely ignored, stating that they will withhold their judgment. Why? To see if policies already shown to have been disastrous when implemented elsewhere will somehow have a magically different effect this time around? If you believe this, give reason why.
As to the whole capitalism is finish pronouncement (aside from the fact that it was government intervention in the housing market that precipitated the current dilemma) I will leave it up to Milton Friedman to rebut that particular one :
http://www.youtube.com/watch?v=RWsx1X8PV_A&eurl

[Michael Prescott]

the policies being implemented by the one, have been tried elsewhere with disastrous effect

Here's an essay that makes the same point - that the stimulus approach tried by Japan resulted in prolonged stagnation, not recovery. The author recommends following the Swedish model instead:

Japan, in the late 1980’s and early 1990’s had a real estate and stock market bubble that burst. They followed that with bank bailouts that are roundly credited with creating a series of zombie banks that were technically insolvent but permitted to survive. It wasn’t until sometime in the early 2000’s that Japan finally closed and/or merged the zombie banks out of existence. The United States appears to be following the Japanese playbook instead of the Swedish playbook. The Swedes took the financial bull by the horns, nationalized troubled banks, closed others down, reorganized their financial system, and sold the cleaned up banks back to the private sector. Did it hurt? Yeah, but it seems to have worked.

[Michael H]

The author recommends following the Swedish model instead

That's an excellent link, MP.

From what I understand the resistance to the Swedish model is predicated not in the least upon the scale of this problem in comparison. The excess that went on in the global financial markets was so severe in this case that we're in entirely uncharted waters.

Still, it seems to me that the only way out is nationalization followed by eventual and gradual private recapitalization of the entire global financial market. All of which will take time - wiping out all of the current stock and bond holders of the financials will necessarily lead to a great deal of resistance in efforts to attract new private capital to the financial sector.

This is not going to be business as usual for a while, near as I can tell.

[GregL]

"In the immediate aftermath of 9/11 how many would or indeed did state, that America would not suffer another such occurrence?
The fact alone that under Bush another such attack did not occur should be lauded. Not, breezily ignored."

Let's also not breezily ignore the fact that 911 happened ON Bush's watch, AFTER he was warned about a possible attack coming.

[Craig]

Bush is holds culpability for 9/11. Seriously, why stop there? Why not take the step that others have taken and say he deliberately allowed the attack to occur for his evil Machiavellian purposes?
A little rebuttal to your claim from the New York Post addressing the 9/11 commission:
"Isn't it a fact, Dr. Rice, that [President Bush was] warned against possible attacks in this country?" demanded Ben-Veniste. It seems to gall you to make this admission. Though perhaps I am wrong and you won't try to minimize or invalidate this achievement.

Funny thing about that warning. Ben-Veniste was speaking of the now-famous Aug. 6, 2001, presidential daily briefing paper - suggesting that it proved the White House had failed to comprehend al Qaeda's threat to America.

Yesterday, it came out that someone had indeed gotten it right.

George W. Bush, who had directed that the briefing paper be prepared.

In a 13-page report titled "Threats and Responses in 2001," the commission staff paints a picture of alarm bells going off throughout Washington in the months before 9/11 about an imminent "spectacular" terror attack by Osama bin Laden.

But the intelligence reports all talked about attacks occurring against targets overseas.

And the fevered reports, in the summer of 2001, of possible threats "seemed to be focused on Saudi Arabia, Israel, Bahrain, Kuwait, Yemen and possibly Rome, but the danger could be anywhere . . . "

So the CIA prepared the Aug. 6 memo, "summarizing its understanding of the danger."

In sum: The briefing paper was written specifically for the president in direct response to an order from the president!

Obviously, the CIA's "understanding of the danger" was deficient.

But it clearly was not "a fact" that Bush was "warned against possible attacks in this country."

It is clear, now, that the entire briefing-memo "scandal" was sewn from whole cloth. But will there be an apology from Ben-Veniste, Kerrey & Co.?

Not a chance.

I am wary of reading too much into your response, but at an initial glance it smacks of Bush derangement syndrome. However I will take from your reply that you now acknowledge Bush presided over a response that ensured no further terror attacks occurred within the U.S. This admission does seem to gall you though. But perhaps I am wrong, and you will not try to invalidate or minimize this achievement further.

[william]

“Still, it seems to me that the only way out is nationalization followed by eventual and gradual private recapitalization of the entire global financial market”

It is interesting to watch socialism practices try to save the failure of capitalism. Of course no one is saying capitalism failed just bad characters misusing capitalism. We prefer to blame people rather than look at the system usually supported by our cherished beliefs in spite of the evidence.

As W Edwards Deming taught most problems are systemic. Few understood his teachings very few. Three corporations that did not. GM, Ford, Chrysler. I find it interesting that we are “*giving” billions of dollars to the same CEO’s that drove their companies into bankruptcy. That does not even pass management 101.

Paradigms are interesting phenomena’s.

I will stick with my original statement that both parties are participating in the rapid decline of a nation.

*any one think we taxpayers will get that money back?

[william]

After my last post I started to reread Findlay’s book on the edge of the etheric and found these two paragraphs interesting considering the difficult times the world is going through:

“Our minds will ultimately be in complete control of our surroundings and as we think so shall we be. This I believe is our destiny and our first step towards reaching this control over our surroundings, over time and space, is our time on earth, it being to achieve this end that we, as individualized minds, pass through our earth experience.”

“Mind is infinite, eternal, always changing, always developing, always creating new forms from old and never at rest”

My point is that we are learning and the law of progress gives us feedback to help us learn. Listening to that feedback whether it be an individual, corporation, or a nation is not always easy and it can often challenge our most cherished beliefs.

"Of course no one is saying capitalism failed just bad characters misusing capitalism."

The banking crisis is a failure of the government policy that pushed for lax lending requirements which led people to buy homes they couldn't afford, and encouraged speculation (ie condo flipping) which drove prices up.

http://mjperry.blogspot.com/2009/02/upside-down-economics.html

"Lending money to American homebuyers had been one of the least risky and most profitable businesses a bank could engage in for nearly a century."

That was what the market was like before the government intervened. Like many government interventions, it began small and later grew."

Some people try to blame the Bush administration for his failure however...

http://mjperry.blogspot.com/2009/02/timeline-bush-mccain-warned-dems-of.html

"The Bush Administration, Alan Greenspan, Treasury Secretary John Snow, and Senator McCain warned repeatedly about Fannie Mae and Freddie Mac and what thus became the 2008 financial crisis -- starting in 2001. Democrats like Barney Frank resisted."

[william]

“The banking crisis is a failure of the government/ Some people try to blame the Bush administration for his failure however...”

Still into the democrats and republican thing and around and around we go and where it ends no one knows. Ok I guess we do bankruptcy of a nation.

Maybe you did not read the part were I state that “both parties are participating in the rapid decline of a nation”. It is about two competing ideologies and neither benefits the majority of the citizens of that country. They want it that way a two party system that is continually at odds with one another with their frozen in time ideologies and everyone takes up a favorite side and belittles the other side.

If there is a more incompetent group of people in America than congress I have not seen it. It is not about their incompetence as individuals it is about a “system” that allows such incompetence to continue decade after decade.

Hi William,

Actually I agree with you, there are deep problems in Washigton. I posted those articles because I thought people might be interested in the history of what is going on, not because I disagreed with you.

The failed government policy is really not democratic or republican. My understanding is it started with Clinton and Bush continued it enthusiastically. Everyone thought it was a good idea. Congress had oversight and they didn't do a very good job of overseeing the bad policy. A truly #$$%@$@'ed up situation.

[GregL]

"I am wary of reading too much into your response, but at an initial glance it smacks of Bush derangement syndrome"

Bush derangement syndrome!? I guess the 65 historians who just ranked this guy as one of our WORST Presidents ever, almost dead last in economics and foreign policy, are also "deranged." Or, is the shoe on the other foot here? I sense a lot of sour grapes over this election, enough to "derange" somebody? Bush closed the barn door after the horse got out on 911, pure and simple. All the pretzel logic in the world will not remove the stark fact that 911 happened on Bush's watch. What ever happened to "the buck stops here?"

Did he do a good job preventing attacks after 911, possibly. He certainly tried to make political hay by claiming he thwarted several plans, plans that were never quite verifiable. I still see Osama and his top man are still out there though, and oh yeah, didn't he invade the WRONG country?

[Craig]

So, Bush 'possibly' did a good job in ensuring no further attacks took place. Boy, talk about pulling teeth. Your logic though, puzzles me. In one breath, you say that Bush is responsible for 9/11 because it happened on his watch (though exactly how he is responsible you don't say, perhaps we should just take if for granted that as a conservative that makes him so hmmm?). But in the next, state that only 'possibly' did he do a good job preventing America from further terrorist attack. That's some argument you have put forward. He's 100% responsible for 9/11 because it happened on his watch, but only possibly, maybe, hmmm not really sure, deserves credit for preventing further terrorist attack. So your whole 'buck stops here' belief only works when it comes to those things which you believe excoriate the man?
As to invading the wrong country, I take from this statement you believe the freeing of Iraq and the Kurds from murderous persecution, the introduction of democracy to a fetid region whose history is one of barbarism and fanaticism, and, the giving of women (you know, the other half of the population?) the vote, a number of whom stood for office just recently, elections that took place with no violence whatsoever, all to be manifestly wrong too.
Come to think of it, didn't the One, when the war was at its worst, indulge in an obscenely irresponsible appeal to hysteria, stating that Iraq was a lost cause and that the troops needed to be brought home? Contrast that with the free elections that just took place in Iraq, and the situation in Kurdistan (the place the media never tells you of because it is going so well). So yes, all of this is wrong. So terribly, terribly wrong. Were Saddam in power today, America's national security would be in a far, far stronger position. It's obvious! So obvious in fact, I'm surprised those silly cows standing for election in Iraq haven't realized this. Don't they know that democracy, just like school, just like freedom itself, doesn't apply to you if you have ovaries?

[patrick prescott]

This is not a failure of capitalism. This is a failure of mercantilism disguising itself as capitalism. Under capitalism stock holders should be acting as brakes on management to keep them from gambling away their dividends and looting the company with excessive bonuses. The master/serf model is what most major banks and corporations are operating under today. I'm waiting to see if we go back to corporate towns and the company store!
Bill Moyers interview with Simon Richards was eye opening for me as he discussed the Swedish model for dealing with banks of this size and now it's just a matter of seeing if any of our politicians have the balls to make the change necessary.

[Michael H]

Just a couple of observations on the banking mess. First, E.J. Dionne's column this week contained these tidbits:

Obama is clear that he doesn't want to follow Japan's slow-moving bank rescue model from the 1990s, which "sort of papered things over, never really bit the bullet."

He's not ready to go down Sweden's road of temporarily nationalizing the banks. "You can make a good argument for the Swedish model, except for this fact: They only had a handful of banks," he said. "We've got thousands of banks. The scale, the magnitude of what we're dealing with is much bigger."

Yet on the continuum of Japan to Sweden, Obama is clearly closer to Sweden, and he pointedly refused to rule out the Swedish approach. "I think what you can say is I will not allow our financial system to collapse," he said.

Also, Reuters reported this morning that nationalization fears are continuing to drive financial stocks down, especially Citi and BOA:

"When you talk about nationalization you hear the names Citi and Bank of America as the top two names burning out," said Walter Todd, a portfolio manager at Greenwood Capital Associates.

"We still don't have any clarity about what course of action they (the government) are going to take. In the absence of specifics, people just jump to their own conclusions," he added.

Both of these two giant's stocks are over 90% off their 52-week highs, and as long as there's continuing talk of nationalization, investors will be reluctant to risk further capital. The other major US financials aren’t faring much better.

I still think it’ll be a while before the feds take the inevitable step - I'd guess another six or twelve months, but it could be sooner. The anonymous poster is correct in pointing out that governmental interference in loosening lending standards started this mess, but few seem to grasp that it was the financial industry's emphasis on building leverage instruments on top of leverage instruments that led to both the tremendous profits in the early part of this decade as well as the massive losses on the way down.

If someone is leveraged at 40-1, a 2.5% rise in the asset value leads to a profit of 100% - you double you're money. If the asset rises by 10%, you've suddenly quintupled your investment. This went on over and over for years - Hedge funds and Investment banks were raking in extraordinary profits for the better part of the last decade, and it all worked so well that new loan products were created in order to keep the leverage party going, while risk assessment was essentially forgotten. When the underlying loans began to default at levels that exceeded the assumed risk involved, starting with the subprimes, the players suddenly discovered that as beautiful as leverage works on the way up, it's even more devastating on the way down. Given that these were people holding MBA's from Harvard and Yale, you wouldn't think that they needed someone to point this possibility out to them.

If you're leveraged at 40-1 and the asset value falls by 2.5 %, you've lost your entire investment and need to raise more cash. Now consider what happens if you've leveraged up to invest in all sorts of exotic derivative instruments, and wake up to discover that there is no longer any market at all for them - in other words, the value of the investment has fallen by 100%, for all intents and purposes. If you've got $25 million supporting a billion dollar asset, and the asset value effectively falls to zero, you now owe somebody $975 million. They don't much care if you can't come up with the cash.

That is essentially the scenario that is going on in the entire global financial system, over and over again, and is why interbank lending has dried up. No one knows what anyone else has on or off their books. It is worth keeping in mind that the global derivatives market, which is almost entirely unregulated, is estimated to be valued at over $600 trillion, or about ten times the GDP of the entire planet. That number does represent bets on both sides, so much of it cancels out, but still.

It seems clear enough to me the only solution is for governments around the world to step in and close down the system, forcing all of the players to absorb enormous losses, and then start over. The questions to ask are not whether this step should be taken, but when it will be taken, and what will what we start over with look like.

As far as the battle raging between supporters of 43 and Obama - history will tell us what Bush's legacy actually is. Things may look very differently twenty years from now, even though he left office as the most reviled president since Hoover.

Obama, on the other hand, is what we've got now, and he's inherited a real mess. That mess cannot be laid entirely at W’s feet, however. I think W was a basically decent guy who was in over his head and tended towards reactivity rather than responsiveness. I’m hopeful that Obama will tend towards the latter, but only time will tell.

I wish them both the best.

[william]

“oh yeah, didn't he invade the WRONG country?”

“With communism man exploits man with capitalism it is the other way around.”

Again as Dr. Deming knew so well we continually blame people for systemic problems. Example: “Under capitalism stock holders should be acting as brakes on management”

The problem is stockholders not the system?????? Political, economic, and religious systems influence human behavior as it did in the former Soviet Union and as it has in America.

It took my one and only revelation in my life to see what Dr. Deming saw and taught. I went home that very night and wrote him a letter and apologized to him for my lack of understanding and for teaching for five years that he was only a statistical “guru” rather than his deep understanding of variation and systems as it applies to leadership. My success at sharing that revelation has been about nil.

Deming truly taught profound knowledge and predicted if we did not change we would be experiencing the very crisis we are experiencing today. In fact his book is entitled out of crisis. “The aim of the W. Edwards Deming Institute is to foster understanding of The Deming System of Profound Knowledge to advance commerce, prosperity and peace.” (Deming institute)

“As to invading the wrong country,…………..” you forgot to mention they have 40 years of oil reserves.

I suspect the middle path or moderate path that I alluded to earlier is very very difficult to find not only for an individual but also for a country. I.e. especially I suspect for a nation so divided in political and economic ideologies. We are learning as an individual, a nation and indeed as a world these spiritual laws grounded in love and compassion.

“Just a couple of observations on the banking mess.”

Maybe bigger is not always better. As I do business with a small rural bank and a large muti corp bank it appears the service is much better with the small rural bank that take an interest in their local communities.

[GregL]

"I take from this statement you believe the freeing of Iraq and the Kurds from murderous persecution, the introduction of democracy to a fetid region whose history is one of barbarism and fanaticism, and, the giving of women (you know, the other half of the population?) the vote, a number of whom stood for office just recently, elections that took place with no violence whatsoever, all to be manifestly wrong too."

Abhu Graib, at least 100,000 dead innocent Iraqis, many of them women and children. Torture, extraordinary rendition. Hey, sounds alot like Saddam Hussein doesn't it? Except this was more effecient killing. Not to mention the 4000 American kids killed, and 40,000 wounded, and the 1$ trillion spent for NOTHING. On second thought, you are probably right(or Karl Rove in disguise), he did it for truth justice and the American way, and to free women(except the ones that got killed)too. That's why they throw shoes at him over there, they appreciate his help so much. What a guy! He couldn't even get the oil he was really after. This is getting boring, got a copy of My Pet Goat I can borrow?

[Michael Prescott]

It may be time to stop bashing W and start focusing on the current administration's policies, which will have far more effect on our country as we go forward.

[dmduncan]

A Johnny Cash tune is singing in my head...

There's a man going 'round taking names
And he decides who to free and who to blame
Everybody won't be treated all the same
There'll be a golden ladder reaching down
When the Man comes around

The hairs on your arm will stand up
At the terror in each sip and in each sup
Will you partake of that last offered cup?
Or disappear into the potter's ground
When the Man comes around

I like Johnny Cash.

[Craig]

“Abhu Graib, at least 100,000 dead innocent Iraqis, many of them women and children. Torture, extraordinary rendition. Hey, sounds alot like Saddam Hussein doesn't it? Except this was more effecient killing. Not to mention the 4000 American kids killed, and 40,000 wounded, and the 1$ trillion spent for NOTHING. On second thought, you are probably right(or Karl Rove in disguise), he did it for truth justice and the American way, and to free women(except the ones that got killed)too. That's why they throw shoes at him over there, they appreciate his help so much. What a guy! He couldn't even get the oil he was really after. This is getting boring, got a copy of My Pet Goat I can borrow?”

I will ask you a question. And be honest. What would have happened to an individual who threw a shoe at Saddam? Now, if you have any intellectual integrity, you will acknowledge that an industrial meat grinder would have been brought into play somewhere.
So what, by comparison, happened to the individual who threw a shoe at Bush? Putting aside for a moment the fact that the man who threw the shoes, belongs to the branch of Islam that most benefited under Saddam’s reign. A fact you either knew, but failed to disclose, making you dishonest. Or which you were ignorant of, making you well, ignorant. But I digress. What happened to this man? Torture? Execution? Or arrest and lawful trial.
The irony that an incident you hold up as damning of Bush, actually serves to highlight the massive changes for the better he has brought to Iraq, is probably lost on you though.

Now to address your 100, 000 innocent Iraqis statement which you derive from the survey conducted by John Hopkins University. I will quote lengthily because such an uniformed hysterical statement, is worthy of an informed, rational reply.

“Here's how the Johns Hopkins team—which, for the record, was led by Dr. Les Roberts of the university's Bloomberg School of Public Health—went about its work. They randomly selected 33 neighborhoods across Iraq—equal-sized population "clusters"—and, this past September, set out to interview 30 households in each. They asked how many people in each household died, of what causes, during the 14 months before the U.S. invasion—and how many died, of what, in the 17 months since the war began. They then took the results of their random sample and extrapolated them to the entire country, assuming that their 33 clusters were perfectly representative of all Iraq.
This is a time-honored technique for many epidemiological studies, but those conducting them have to take great care that the way they select the neighborhoods is truly random (which, as most poll-watchers of any sort know, is difficult under the easiest of circumstances). There's a further complication when studying the results of war, especially a war fought mainly by precision bombs dropped from the air: The damage is not randomly distributed; it's very heavily concentrated in a few areas.
The Johns Hopkins team had to confront this problem. One of the 33 clusters they selected happened to be in Fallujah, one of the most heavily bombed and shelled cities in all Iraq. Was it legitimate to extrapolate from a sample that included such an extreme case? More awkward yet, it turned out, two-thirds of all the violent deaths that the team recorded took place in the Fallujah cluster.
The study, though, does have a fundamental flaw that has nothing to do with the limits imposed by wartime—and this flaw suggests that, within the study's wide range of possible casualty estimates, the real number tends more toward the lower end of the scale. In order to gauge the risk of death brought on by the war, the researchers first had to measure the risk of death in Iraq before the war. Based on their survey of how many people in the sampled households died before the war, they calculated that the mortality rate in prewar Iraq was 5 deaths per 1,000 people per year. The mortality rate after the war started—not including Fallujah—was 7.9 deaths per 1,000 people per year. In short, the risk of death in Iraq since the war is 58 percent higher (7.9 divided by 5 = 1.58) than it was before the war.
But there are two problems with this calculation. First, Daponte (who has studied Iraqi population figures for many years) questions the finding that prewar mortality was 5 deaths per 1,000. According to quite comprehensive data collected by the United Nations, Iraq's mortality rate from 1980-85 was 8.1 per 1,000. From 1985-90, the years leading up to the 1991 Gulf War, the rate declined to 6.8 per 1,000. After '91, the numbers are murkier, but clearly they went up. Whatever they were in 2002, they were almost certainly higher than 5 per 1,000. In other words, the wartime mortality rate—if it is 7.9 per 1,000—probably does not exceed the peacetime rate by as much as the Johns Hopkins team assumes.
The second problem with the calculation goes back to the problem cited at the top of this article—the margin of error. Here is the relevant passage from the study: "The risk of death is 1.5-fold (1.1 – 2.3) higher after the invasion." Those mysterious numbers in the parentheses mean the authors are 95 percent confident that the risk of death now is between 1.1 and 2.3 times higher than it was before the invasion—in other words, as little as 10 percent higher or as much as 130 percent higher. Again, the math is too vague to be useful.
There is one group out there counting civilian casualties in a way that's tangible, specific, and very useful—a team of mainly British researchers, led by Hamit Dardagan and John Sloboda, called Iraq Body Count. They have kept a running total of civilian deaths, derived entirely from press reports. Their count is triple fact-checked; their database is itemized and fastidiously sourced; and they take great pains to separate civilian from combatant casualties (for instance, last Tuesday, the group released a report estimating that, of the 800 Iraqis killed in last April's siege of Fallujah, 572 to 616 of them were civilians, at least 308 of them women and children).
The IBC estimates that between 14,181 and 16,312 Iraqi civilians have died as a result of the war—about half of them since the battlefield phase of the war ended last May. The group also notes that these figures are probably on the low side, since some deaths must have taken place outside the media's purview."

So 100, 000? Not at all. Not even close. But still, when do facts matter when it comes to belief systems? They haven’t with you when it comes to the incident in which Bush had shoes thrown at him. They haven’t when it comes to wholly unsupportable claim that 100, 000 innocent Iraqis died as a result of the war. And they don’t when in a single sentence you state that Bush instigated the war to lay claim to Iraq’s oil reserves but the fact that the U.S. has not benefited in anyway from said supplies does not evidence that they war was nothing to do with this. But rather, just goes to show how stupid Bush really is.
Truly, your arguments are ridiculous. And you wonder why I use the word derangement in describing you?
In your very, very warped reality, it is all evil conspiracies, headed up by people who are nevertheless stupid, but barbarous too, don’t forget that. People who kill innocents willfully (note the dripping scorn you use when spitting out the words American way), killers, who suddenly upon their death, metamorphose into innocent victims themselves. Just another bloody flag for you to wave which in you mind validates the person you see yourself as being. One, who radiates light. Who sees the tragedy. Who champions the innocent. Most certainly not one, who seethes with rage, who launches in histrionic tirades in which reality is warped so that it may feed the ego. It’s like the old joke, ‘How can you tell when there is a peace march taking place? Looking for the burning cars and trashed shops.’ Angry, bitter, fearful people, seldom are ever capable of admitting they are such. Instead, they transfer those emotions onto those who they perceive as their foes. They then, are free to adopt the mantle of the victim. And as such be free from accountability for their actions. Such people though, are always very easy to identify, as simply, their actions are incongruous with their stated positions, just like the peace protester violently trashing cars and businesses.
After now, this very lengthy reply, which you could not hope to rebut, anymore than you did my others posts in this comment thread. I do not think I will reply again. You arguments are so weak as to be non-existent, and your psychosis, too deep for me to have any effect on altering the poisonous reality which you have constructed around yourself.
Your example though, can serve as a salutary warning to others.

[Teri]

Craig, I do not understand why you seek to justify the war against Iraq. Do you seriously think it was undertaken for the purpose of bringing a civilised regime to that country? *Seriously*?

If so, why not do the same elsewhere, for instance in Zimbabwe?
What? Did you say Zimbabwe doesn't have any oil?

[Michael Prescott]

why not do the same elsewhere, for instance in Zimbabwe?

Unlike Iraq, Zimbabwe was not believed to have WMDs. As it turned out, Iraq didn't have WMDs either, but prior to the invasion the conventional wisdom, even among opponents of military action, was that Saddam was developing such weapons. After 9-11 the issue of WMDs had new urgency. I think this concern, more than any other, prompted the invasion.

The US hasn't profited at all from Iraqi oil, so I don't see why people keep bringing it up.

I do think Bush is idealistic enough to have wanted to create a new democracy in the heart of the Arab world, possibly sparking democratic reforms in neighboring countries. Whether his idealism is justified or merely naive remains to be seen, and we can always argue about whether the cost was worth it. At the moment, the Iraqi government seems to be functioning pretty well, but will it hold up? Only time will tell.

[william]

Haste makes waste.

Rush to war will cost us trillions. European countries knew that we Americans did not.

I.e. long term medical cost, injury benefits, mental breakdowns, etc.

To say nothing of the lives lost and wounded of both Iraqi and American. We keep the Iraqi government locked up in the green zone because if they were out in the general population they would be killed. They will drain our treasure dry.

I find it interesting how a country starving for cash can afford such wars.

The wmd scare was cherry picked; the military officer that worked in the pentagon that was forced to do that now has retired in a western state and stated she would not want her children in the military after what she saw coming out of the pentagon prior to the Iraqi war.

Bush jr stated long before he became president that a war president can use his popularly to win political battles at home and felt his father did not use his popularity effectively.

To call bush jr an idealist is a republican talking point. Iraq and Afghanistan will be Obama’s Vietnam. Some day the printing money solution to our economic problems will run out of steam. In Vietnam it was the threat of communism taking over the world with Iraq and other countries it is the threat of wmd’s.

An interesting website to look at the atrocities of war that the mass media will not touch.
http://ivaw.org/wintersoldier

Michael P if this is also going to be a political discussion blog I hope you allow other opinions to be expressed.

In no way is this support for the democrat’s agenda as they have funded this war and continue to fund it. Both parties are participating in the decline of a great nation after World War II.
Ike warned us what would happen if we did not detune our industrial military complex when he left office but no one listened to him. Too much profit for some.

[Michael Prescott]

To call bush jr an idealist is a republican talking point.

Maybe, but I do see him as an idealist in foreign policy. However, I was not paying him a compliment, because I don't think idealism is a good quality in a president. Pragmatic realism is better.

if this is also going to be a political discussion blog

The focus is almost always on the paranormal, but occasionally I feel the need to vent. Borrowing $2 trillion from the next generation seemed like something worth venting about.

I've noticed that some people often inject political comments into threads that have nothing do with politics, yet the same people object when I voice any political views of my own. Seems like kind of a double standard. But again, I'm not planning to do many posts on politics. There are plenty of other sites that cover that territory.

Here's one I enjoy, for those who care.

[Michael H]

I came across the following today, and it seemed somehow appropriate to this sometimes heated conversation:

"When an individual discovers within himself the beginnings of alienation from others, of misanthropy and ill humor, he must set about dissolving these obstructions. He must rouse himself inwardly, hasten to that which supports him. Such support is never found in hatred, but always in moderate and just judgment of men, linked with goodwill. If he regains this unobstructed outlook on humanity, while at the same time all saturnine ill humor is dissolved, all occasion for remorse disappears."

The I Ching, Hexagram 59, Line Two, Wilhelm/Baynes translation.

[Craig]

Teri - Michael already addressed the issue of WMD and the benefits that of course would have been considered by the introduction to the Muslim world of democracy. Are you honestly taking a position that America would hold far greater national security if Iraq had not been invaded, and Saddam and his sons were still in power?
But to your question on Zimbabwe. Aside from the wholly different political/security dynamic, and the fact that the U.S. has yet to benefit in anyway from all this supposed oil they were conducting the war to secure, the position you have just taken is one where a moral good is automatically invalidated if, in your view, in the past, the same moral action was not undertaken. Reduced to an individual level, this is akin to stating that a man who witnesses two muggings, but only intervenes in one, should not only not receive recognition for his act of intervention, but also, should be castigated for his previous failure to act. This idea that any proposed act of moral good, is immediately negated by a perceived failure to act, or moral blight, in the past. Is a position, which would basically ensure that no-one would advance themselves ever, and as such, is nonsense.

[Alley Eden]

Oil has everything to do with whats wrong or happened with out country. why else would Russia hold on to its resouces and Iraq, Iran and those countries keep it so tightly under reign? I beleive that we are under watchful eyes to see if what has happened to Russia when they fell from a superior power as a socialist country to what is happening to us right now. We are dependent on foreign oil, in turn that makes us vunerable to whats in the hidden hand when dealing with a resouce that drives everything imaginable from cars to transportation; oil has its price tag on everything we own now -which is made-not in the U.S.A. its called global economy, in exchange for their oil. I would elaborate more but only see the label on what you buy now, made in China, Japan,Indonesia etc.. I listen to Rush Limbaugh for amusement these days because he says everything is picking up and jobs are growing, ask yourself what kind of jobs? retail service, is that going to buy us a new house pay for that expensive car?
Ross Perot was right..do yu hear the sucking sound yet?

[william]

“Are you honestly taking a position that America would hold far greater national security if Iraq had not been invaded, and Saddam and his sons were still in power?”

We have created a country of Iraqis that now hate America. That translates to future terrorists. The guy that threw the shoe at bush is now a national hero in Iraq. Iran and Pakistan could be considered a much bigger threat than Iraq. Have you noticed we are always in a war or threat of war?

Almost all the arguments I hear about the Iraq war were also used during the Vietnam War. I.e. things are better, we are winning the hearts and minds of the populace, the surge is working, we need more troops, every day was a body count of dead Vietnamese, the interesting part most Americans did not even know who the Viet cong were.

Most Americans thought it was a simple North Vietnam versus South Vietnam war. Most Americans with the Iraq war thought it was a simple dictatorship rather than three tribes trying to coexist in one country. Few understand that only a dictatorship can force these three tribes to coexist.

I have read we are paying the Iraqis not to kill one another. What do you think will happen when that money dries up? I.e. just more shoes thrown at American presidents?

The Iraq and Afghanistan wars will be Obama’s Vietnam. If he leaves too soon he will be considered a loser of a war if he still has American troops after 4 years he will be considered a president that cannot win a war. My aunt lost her only son in Vietnam she never recovered from his loss.

As far as oil; oil contracts are being signed by private oil companies where with Saddam the oil was nationalized. But with the universe things often happen for a reason without a bush jr there would be no Obama. God works in mysterious ways.

Systems always give feedback but do we listen to that feedback. The human mind knows how to subconsciously filter information that does not support its paradigm. From my point of view this is an absolutely fascinating phenomenon that deserves much more research into the spiritual aspects rather than just the behavioral aspects of this phenomenon.

[Teri]

"without a bush jr there would be no Obama. God works in mysterious ways.

Systems always give feedback but do we listen to that feedback. The human mind knows how to subconsciously filter information that does not support its paradigm."

Just about the wisest thing I've read this week. Thank you, William.

[Craig]

“We have created a country of Iraqis that now hate America. That translates to future terrorists.”

Take your opening sentence, replace just one word, and you will see how historical context (WW II) makes a nonsense of such arguments.

“We have created a country of Germans that now hate America. That translates to future terrorists.”

Obviously the idea that taking military action against an evil, barbarous regime, whether we are talking of Saddam or the religious fanatics that rushed in to fill the power vacuum in the immediate aftermath of his removal, incurs their wrath, and as such should not be undertaken, is one which is nonsense. An idea, which has its roots, perhaps equally, in both a true ignorance of what a free democratic society devoid of government interference for the largest part, provides people, and too, in racism. For how else can such a belief be reconciled? How else but through a free capitalist society, have people, not only escaped crushing monetary poverty, but also, the impoverishment of the freedom of expression? For certainly the second goes hand in hand with the first. Iraq, like so much of the middle east, is a land where such freedom is non-existent. Forget about open dialogue/disagreement such as you and I engage in now. Right of expression goes to the man with the gun. The man, hiding behind the legitimacy of religion (this latter, something which has been seen across all societies through recorded history). What system, other than a capitalist democracy, has ever been shown in black and white, to allow for a free market of ideas? To give people, their inalienable right to free expression? The answer is one which frustrates the left, and that nine times out of ten, they refuse to answer. Because inescapably, there is not a single other one.
And so now, we have seen a system of freedom (one that brings with it its own pitfalls) introduced into a region. One, at its very nascent stages. To take a stance that says a human being would not benefit from such a system, not only goes completely against the reality of all that has been recorded unequivocally throughout history to date. Something, which sadly occurs all to often. As I asked in an earlier post in this comments thread, when have facts ever mattered when it comes to belief systems? But also, ventures into racism. After all, they have brown skin and worship differently, right? Democracy? Freedom? Not for the darkies. Its just not in their genes.
As to the fatuous argument that the Iraq war was conducted because of oil. One, obviously put forward by socialist soft heads in an attempt to invalidate what they saw as an evil capitalist operation. I ask two questions:
1. Where are the huge oil contracts to the U.S. ? Name one.
2. The U.S. has coal reserves enough to enable it to produce synthetic oil for the next one hundred years. Given this fact, why would military action be needed in Iraq for the purposes of oil?

Finally,

"Few understand that only a dictatorship can force these three tribes to coexist."

William, that you endorse such an utterly despicable view, one, so wholly cancerous to freedom. So casual, in its complete condemnation of other human beings, not
, ignorant darkies as you view them, wholly, and completely, disgusts me.

[Craig]

“We have created a country of Iraqis that now hate America. That translates to future terrorists.”

Take your opening sentence, replace just one word, and you will see how historical context (WW II) makes a nonsense of such arguments.

“We have created a country of Germans that now hate America. That translates to future terrorists.”

Obviously the idea that taking military action against an evil, barbarous regime, whether we are talking of Saddam or the religious fanatics that rushed in to fill the power vacuum in the immediate aftermath of his removal, incurs their wrath, and as such should not be undertaken, is one which is nonsense. An idea, which has its roots, perhaps equally, in both a true ignorance of what a free democratic society devoid of government interference for the largest part, provides people, and too, in racism. For how else can such a belief be reconciled? How else but through a free capitalist society, have people, not only escaped crushing monetary poverty, but also, the impoverishment of the freedom of expression? For certainly the second goes hand in hand with the first. Iraq, like so much of the middle east, is a land where such freedom is non-existent. Forget about open dialogue/disagreement such as you and I engage in now. Right of expression goes to the man with the gun. The man, hiding behind the legitimacy of religion (this latter, something which has been seen across all societies through recorded history). What system, other than a capitalist democracy, has ever been shown in black and white, to allow for a free market of ideas? To give people, their inalienable right to free expression? The answer is one which frustrates the left, and that nine times out of ten, they refuse to answer. Because inescapably, there is not a single other one.
And so now, we have seen a system of freedom (one that brings with it its own pitfalls) introduced into a region. One, at its very nascent stages. To take a stance that says a human being would not benefit from such a system, not only goes completely against the reality of all that has been recorded unequivocally throughout history to date. Something, which sadly occurs all to often. As I asked in an earlier post in this comments thread, when have facts ever mattered when it comes to belief systems? But also, ventures into racism. After all, they have brown skin and worship differently, right? Democracy? Freedom? Not for the darkies. Its just not in their genes.
As to the fatuous argument that the Iraq war was conducted because of oil. One, obviously put forward by socialist soft heads in an attempt to invalidate what they saw as an evil capitalist operation. I ask two questions:
1. Where are the huge oil contracts to the U.S. ? Name one.
2. The U.S. has coal reserves enough to enable it to produce synthetic oil for the next one hundred years. Given this fact, why would military action be needed in Iraq for the purposes of oil?

Finally,

"Few understand that only a dictatorship can force these three tribes to coexist."

William, that you endorse such an utterly despicable view, one, so wholly cancerous to freedom. So casual, in its complete condemnation of other human beings, not, ignorant darkies as you view them, but human beings, to a shackled existence, wholly, and completely, disgusts me.

[Craig]

Apologies for the double post, don't know what the hell was going on with Firefox there. The post certainly didn't look like that in the preview. The above reply in normal type, not bold, was what I wished to put up.

[Barbara]

/b
Testing to remove Craig's flaming bold

[Barbara]

Ah well

He who is disgusted needs to meditate.

[Michael Prescott]

without a bush jr there would be no Obama

Without an Obama there would be no President Palin.

:-)

(Okay, I admit I said that just to get people even more riled up. I'm now acting like a troll on my own blog.)

[william]

I am sure there are many comedians that pray every night that there will be a president Palin in 2012. My take is until we change the system it matters little who is pres. Years of organizational consulting and one revelation taught me that. Not that leadership is not important but the way the system is set up now one leader cannot change it. Must come from the people. They are not ready yet they have bought into hope. Hope is good but it will not change a system.

An interesting observation what bought Hitler into power was high unemployment and inflation.

Joke of the day: at least Obama has done well his first month in office he has been able to collect 150,000 in back taxes from his appointees.

And one of those appointees who owed back taxes now runs the treasury department. No wonder comedians are so successful in this country. When your secretary of state is married to a former president and he is going all over the world asking for money and congress approves that appointment it may be time to change the system. Instead we blame people much easier to do.

[william]

After reading the above comments by Craig from my point of view the real mystery here is how the human mind can deceive itself to protect its paradigm and cherished beliefs whether that deception is due to patriotism, nationalism, atheism, intellectualism, ideologies, religion, or whatever.

Until we come to better understand that ability and desire to protect our paradigms at almost any cost (even misquoting, verbal attacks, assumptions and yes with some even violence) I suspect our world will always be in a state of wars or threat of wars.

Emmanuel would state that that deception is due to fear and I tend to agree with that assessment and what is that fear based in? Ignorance, which is a synonym for unawareness. That same ignorance that the Buddha realized caused our suffering. The whole journey of the soul appears to become more aware of the reality of our very self as divine, which is; I suspect pure awareness best described as love and divine intelligence.

Barbara’s response is much more loving than mine above.

“What seems to be is not

What you seek outside you already own

The gathering of all experience
Is only to know the nature
Of the love therein.

Enjoy the journey
Your return tickets home
Are guaranteed.” (Emmanuel Book III)

[Craig]

"After reading the above comments by Craig from my point of view the real mystery here is how the human mind can deceive itself to protect its paradigm and cherished beliefs whether that deception is due to patriotism, nationalism, atheism, intellectualism, ideologies, religion, or whatever."

Or you can just address the points raised. Funny thing, every assertion made by those who disagree with me, from the number of civilian deaths that occurred during the war, to the supposed death of capitalism, the idea that one is prevented from acting in a moral manner if such actions have not been undertaken in the past, and the belief that some people just aren't meant for democracy, I have rebutted. Yet, by contrast, not of those whose arguments I have shown to be nonsense, have been able to come back and give a reasoned reply of their own.
I guess they're just too busy contemplating the 'real' mysteries of the human mind. I love the whole cowardice masking as enlightenment bit.
Final question boys and girls, if your positions are so well reasoned, and mine, so obviously wrong and easy to dismantle, why not do so, instead of resorting to the tactics of invalidation?

[Michael Prescott]

Here's a good article by Niall Ferguson on the financial crisis.

Hat tip: Greg Nyquist at ARCHN.

[Craig]

From the given link :

"The delusion that a crisis of excess debt can be solved by creating more debt is at the heart of the Great Repression. Yet that is precisely what most governments currently propose to do."

Sums it up beautifully.

[Pete]

Here's a good article by Niall Ferguson on the financial crisis.

Michael, in your postings "Danger Ahead" and "Doomsday Postponed" you semed to think that this was not a major crisis of capitalism. Do you still think that?

[Michael Prescott]

I think it's a serious problem, exacerbated by bad policies enacted first by the Bush administration and now by the Obama administration.

Originally I thought the problem would blow over fairly soon, but I'm starting to think we may be in for many years of economic stagnation.
I notice Obama is now saying he's very concerned about the deficit and wants to cut it in half. Of course, the deficit would not be such a concern if Obama hadn't just doubled it. He's like the guy who murders his parents and then complains he's an orphan.

In any case, if he does cut the deficit in half from where it is now, it will still be higher than it's ever been in any prior year.

Moreover, his plan for cutting the deficit is to raise taxes on the wealthy and on sales of stock. I doubt this can work. The wealthy either will find ways to avoid paying the tax or will not work as hard. And if the cost of owning stock goes up, people will own less of it - depressing investment at the very time when we ought to be encouraging it. Thus, his "revenue-enhancing" measures are more likely to reduce revenues.

In short, I have very little confidence in Obama, and I think we are in for a rough ride.

But I'm no economist, and my opinion is worth no more than any other layman's. And certainly my perspective is strongly skewed by my conservative poliitical values. Maybe I'm looking at this thing all wrong, and am too ego-invested in my position to know it. Only time will tell.

[william]

“But I'm no economist, and my opinion is worth no more than any other layman's. And certainly my perspective is strongly skewed by my conservative poliitical values. Maybe I'm looking at this thing all wrong, and am too ego-invested in my position to know it. Only time will tell.”

That is a very reflective and insightful statement that few have in the world. As far as the liberal or conservative agenda in my view neither will prevent this self-destruction of our national wealth.

But give obama credit if we can start to collect unpaid taxes with penalties at the rate he is collecting from his new appointees we would be able to pay off our debt in five years and have some left over for some ceo’s of banks to buy more corp jets and that would stimulate the economy. Unless of course those jets were made outside the United States.

We Americans are too individualistic and results only oriented and this leads to intense short term thinking for results that makes it impossible to create a system that benefits the greatest number of people. To bring America back to its previous wealth we would need a paradigm shift of the highest order and paradigm shifts are rare.

It usually takes a profound significant emotional event for an individual to see a new paradigm and even consider such a paradigm shift. This massive decline of wealth of a nation may be the very significant emotional event we need.

When I look at history of countries that have gone through such a decline in wealth it appears most if not all were unable to make such a paradigm shift and return to their previous wealth and world power status. We tend to dance with who brought us to the dance. I.e. keep trying more of the same within the existing paradigm. Sound familiar?

A paradigm shift usually comes from someone outside the existing paradigm and not from those within the existing well established and accepted paradigm.

Bring in leaders from countries that have a sound and stable economic system that benefits the most people within their society. I.e. it won’t happen too much pride.

Because FDR and his approach may have worked in the 1930’s does not mean the same approach will work today. America is a different country today than it was in the 1930’s. It is not about more taxes or less taxes and whom we tax as much about a country that can create wealth and be able to share that wealth fairly. Emphasis on fair. W Edwards Deming taught this for 50 years but few listened to his advice and teachings.

One Example a privatized health care system is a tremendous disadvantage for a company in American to compete with a company that makes the same product in a country with a nationalized system. It is not a level playing field out there in the world and the term free trade is an oxymoron.

[Michael H]

Maybe I'm looking at this thing all wrong, and am too ego-invested in my position to know it. Only time will tell.

Perhaps. And perhaps the same can be said for those who disagree with you.

Another link worth reading is Michael Lewis's article The End in Portfolio. He does an excellent job in this exposition of how the entire Wall Street culture managed to succumb to their collective delusions.

It certainly gives me pause when I consider that those who were deluded enough to create the mess are now deluded enough to think they can fix it.

[GregL]

"You arguments are so weak as to be non-existent, and your psychosis, too deep for me to have any effect on altering the poisonous reality which you have constructed around yourself."

You can always tell when a person's arguments are empty, he resorts to name calling. I feel sorry for you. You must be miserable.

[Craig]

Greg, pull the other one mate, it plays jingle bells. As I have already said, every ludicrous assertion put forward, from the number of civilian casualties in Iraq, to the idea that the war was conducted to secure oil reserves, the belief that a moral action cannot be undertaken if a similar action has not been performed in the past, to the position that certain people just aren't cut out for democracy. I have addressed with reasoned responses. Responses, which have not been countered at all. I wonder why?
You yourself Greg are typical of such cowardice and dishonesty. Look at how you represent my replies in this thread, you take a single sentence at the end of a reply which included a 823 word factual rebuttal of the John Hopkins survey which found that 100,000 civilians died during the Iraq war, and then state:
"You can always tell when a person's arguments are empty, he resorts to name calling. I feel sorry for you. You must be miserable."
How do you justify such gross misrepresentation? As I have already asked, if my arguments are so empty, so easy to rebut, why have they not been addressed on a factual basis? All I've gotten to date are pitiful comebacks about the 'real' mysteries of the human mind, and gross misrepresentations of my replies by you.
So here's my challenge to you Greg. Grow a pair, and put up some reasoned arguments to the factually supported positions I have given. Should be real easy for you to do, after all, my arguments are 'empty' right?

[william]

“It certainly gives me pause when I consider that those who were deluded enough to create the mess are now deluded enough to think they can fix it.”

Yes we have a government that believes we can give those that caused the “problem” enough money that we can somehow spend our way out of this economic meltdown. Corp jets anyone on taxpayer’s money. Or better yet flying in private corp jets to ask for a bailout not having a clue they have met much of the problem on the flight over to wash.

Even more interesting to me is that we believe if we insert some socialistic practices to recover then slowly go back to a deregulated privatized system. I.e. capitalism. Rather than take an in depth look at the system and cherished beliefs that brought us to this economic meltdown that most want to call a recession as to not upset the populace and for reelection purposes.

You see it is not as simple as challenging an existing paradigm as paradigms are hidden from our view. We accept our beliefs as fact even in spite of the evidence.

The universe is speaking to us but are we listening. Once during a very difficult seminar while teaching phd’s I went to the mountains and stood on the top of one and looked up and asked a simple question: “what am I missing” and I heard a voice say “just about everything”.

As I just finishing listening to a randi tape on parapsychology and reading Craig’s responses where he belittles everyone that does not agree with him that our *certainty can overwhelm our minds. You see when I started to change my approach to teaching those weeklong seminars I noticed the participant’s resistance started to change. Now the “just about everything” comment. That comment I have learned had much more truth in it then I care to share.

But I also believe at this time that it is our ignorance that makes us who we are and without that unawareness there is no us just Isness. Oneness plus unawareness is us and all of our desires (even misguided ones) may stem from that longing to return to that Oneness. Or not.

[william]

Several days ago I wrote these comments in response to Craig’s attacks. By taking the time to write these responses says more about me than Craig I suspect. Once someone knows they have the facts taking the time to respond in such detail may say more about the responder than the person that made the original comments.

I take it my comments were not to your liking. To protect you paradigm you even misquoted me to try and make your point. Wow to use quotations and change a word or words within the quotation I am not sure is even legal. Maybe in the tenets of swiftboating 101.

“We have created a country of Germans that now hate America. That translates to future terrorists.”

Nothing like inserting a word and then using that as a quote that misleads the reader. The state of affairs in Germany after World War II was totally different than the state of affairs in Iraq. Iraq was never meant to be one country but forced to be by an invader in the past.

“The U.S. has coal reserves enough to enable it to produce synthetic oil for the next one hundred years”

Yes and we are blowing the tops off of mountains to get that coal and it cost more to make into oil and the oil companies are not into the coal business and it does not burn as clean. I.e. environmental issues. I.e. possible future mega lawsuits.

“So casual, in its complete condemnation of other human beings, not, ignorant darkies as you view them, but human beings, to a shackled existence, wholly, and completely, disgusts me.”

Nothing like putting words in another’s mouth. Please for me take a trip to baghdad and spend your evenings walking the streets and see how well you are treated as a liberator without an armed escort and then get back to me and see how popular you are being an American and freeing them from a dictator. Just being sarcastic here we are not being treated as liberators but invaders.

If for one moment you could project what it would be like in your town having Iraqis soldiers walking down the streets and into you home looking for weapons. Then maybe you could have some understanding of how they feel and how they view us. But then we know what is best for them don’t we. Did you visit the winter soldiers website? I suspect not.

Go to Iraq take a poll and find out how many want us there in their country not the politicians protected behind the green zone but the people. But we know what is best for them don’t we?

You are another person that fails to understand the tribal mentality of that region. Oh and please find and quote me directly where I called them ignorant darkies.

From my point of view this post represents one person that has allowed patriotism and nationalism or political ideology to overwhelm their rational mind even to the point of misquoting. This is a classic case of swiftboating in action.

But the real mystery here is not this political ideology stuff but the human mind (mine included) that can deceive itself and protect its paradigm even to the point of misquoting another, which can be checked out to be false in a matter of minutes.

“An Iraqi plan to award six no-bid contracts to Western oil companies, which came under sharp criticism from several United States senators this summer, has been withdrawn, participants in the negotiations said on Wednesday.”

“The deals would have been the first major oil contracts with the central government since the toppling of Saddam Hussein in 2003, though the Kurdistan region has separately signed more than 20 contracts.”

Ray Hunt is the kind of Texas oilman with easy insider access to the Bush White House. Perhaps not coincidentally, he also heads the first American oil firm to have received an oil exploration contract with the Iraqi Kurdistan Regional Government, announced last September.

[Michael H]

It would seem to me that whether the decision to invade Iraq was right or wrong is rather a moot point. The fact is we did, and the decision to do so was supported in a bipartisan fashion. Even the New York Times was behind it. The question to ask at this point is not whether we should we have done so, but where do we go from here.

I tend to think that future historians will eventually look at the Iraq incident in a much more favorable light than many expect at the moment, but I'm not particularly prescient. It's also true that those who wish to reverse history and point to the costs involved as part of their argument tend to ignore that the costs involved in containment of Saddam weren't insignificant either.

I've said before that the decision to invade Iraq appears to me to have been driven by the collective reactivity that swept throughout the western world following 9/11. There were all sorts of justifications put forth, but it seems to me that the real answer to "why did we do that?" is about the fear and anger that had seized minds in the west. I also think that those who continue to fight about it today are basically engaging in more reactivity as a response to reactivity.

Where I agree with Greg is in something that Craig appears yet to grasp, which has to do with the art of attacking the position and not the person. Still, I'm not sure that the nuance involved in this point can be grasped by someone who doesn't consider the human mind mysterious. I want to be clear that I'm not engaging in an attack of my own when I suggest that.

To return to The I Ching again, Hexagram 62, Line Three reads:

At certain times extraordinary caution is absolutely necessary. But it is just in such life situations that we find upright and strong personalities who, conscious of being in the right, disdain to hold themselves on guard, because they consider it petty. Instead, they go their way proud and unconcerned. But this self-confidence deludes them. There are dangers lurking for which they are unprepared. Yet such danger is not unavoidable; one can escape it if he understands that the time demands that he pay especial attention to small and insignificant things.

Strikes me as pretty good advice for someone to arrive at by staring at cracks in turtle shells. It also can be read to apply to both the decision to invade Iraq, and the mindsets of those who continue to battle over that decision today.

[Craig]

William, you talk of how soldiers are resented. And yet, in opinion polls conducted Iraqi citizens overwhelmingly say that conditions are far better now than when Saddam was in power. Shocker right? Too, look to the recent elections. Embraced by all 'tribes' as you call them. If resentment of the U.S. and what it represents is so strong, and your belief that only a dictator could bring peace (albeit the peace of slavery) to such a region so correct, how on earth do you account for such things?
Your argument betrays your disdain of American or at least conservative/military America. You talk of the safety of the soldiers there, painting a picture that the whole of the populace advocates violent intent towards them. Not only does this not make one iota of sense when held against the two indisputable facts I gave above, but too, goes wholly against the very tribal argument you have already put forward. They are all different you say, it takes the force of a dictator to bring peace. If this is indeed the case, why would the faction of Islam that fared worst when Saddam was in power, act violently remove those whose actions have placed them in a manifestly better position? It's the shoe thrower argument all over again. You present resentment as universal across Iraq, when it is anything but.
Now it is true, I have ridiculed. But Skippy, you only have yourself to blame on that score, because you have stated ridiculous positions. Such as your belief that the people of Iraq are not conducive to democracy. The very facts in light of the recent elections smack right between the eyes with how wrong you are on this one. And yet still you hold to your position. A position that condemns human beings to utter slavery. That is what your position does. Rather than face this, you try to talk your way out it. Peddling falsehoods of a universal hatred of the American soldiers despite facts already cited which show this as nonsense.
So ignorant darkies? Yep, I said that, not you. But whether you realize it or not, I was actually paying you a complement. For I took your actions to be racist. Which would mean that you viewed the Iraqi people as less than human, and on that basis, denied them the inalienable right of freedom (which they have overwhelmingly embraced). But clearly, you do not think that way (according to you), you do view them as human beings. Just human beings that are not deserving of freedom. You're right, that's so much better.
As to your arguments regarding the reasons why synthetic oil production would not be pursued, they are foolish on two fronts. First, your position is one where an evil/stupid man engaged in a horrid invasion of another country that was manifestly wrong, and deserving of condemnation. One that claimed the lives of so very many. And yet, despite doing all this, he wouldn't pursue synthetic oil production because (in your view) he would have to pollute and blow up mountains don't you know. Which akin to saying while Hitler loved killing Jews, he'd balk at kicking a puppy. Secondly, the basic way in which a free market economy works obviously eludes you. As a resource becomes more scarce, and so more expensive, it then becomes financially viable to pursue that resource. In the cases of oil, conducting drilling operations that were financially un-viable in the past. Too, synthetic oil production is quite inexpensive. And in fact, was propose roughly twenty years ago, something which then panicked opec to drop the price of oil to ridiculous lows in order that option be taken off the table. Of course that was before green evangelists started screaming about Co2 output.
"If for one moment you could project what it would be like in your town having Iraqis soldiers walking down the streets and into you home looking for weapons. Then maybe you could have some understanding of how they feel and how they view us."
Yes, they much prefer being blown to bits in suicide attacks and remotely detonated explosives. Your point is well taken.
So we come back to the questions again that have been failed to answer.
You say democracy could not work there? It already has. You don't counter this. Or indeed explain how you casually condemn human beings to being enslaved under a dictator. And no, "you do not understand the tribal mentality" is not an explanation.
You make lazy assertions about the cost of producing synthetic oil giving no numbers whatsoever, and ignoring too that this has already been proposed many, many years ago, and was abandoned only when it forced opec to radically reduce the cost of oil.
Finally, I make this observation. Look how invested you are in Iraq descending in violence and bloodshed. Look how you invalidate or wholly ignore the truly remarkable moral goods that have taken place. What does this say of you? What does it say that for you, Iraq must not now become a much needed beacon of freedom within the Muslim world? At least not because of the actions of Bush. Because if that were to happen, well...

[william]

“I also think that those who continue to fight about it today are basically engaging in more reactivity as a response to reactivity.”

I agree with much what you state. As for me being a former Vietnam War protester I see such parallels in this war and the Vietnam War. Too many to discuss here. One: We were told then and now how things are getting better even while we keep their gov locked up behind the green zone and I have read we pay these tribal military units money not to kill one another. Two: like we were told about Vietnam we are winning the hearts and minds of the people even though if a poll was taken most want us to leave. But then we know what is best for them don’t we.

Also history can teach us much and there are parallels between this rush to war and our rush to war back in the sixties. Most Americans then did not even know who the Viet cong were as today most Americans do not know the complexity of the Iraqis with their three tribes mentality.

With that three tribes mentality in Iraq to think we would be treated as liberators was naïve at it’s very best or worst. The cost of these two wars and I suspect the one with Iran coming soon will put the finishing touches on our economic meltdown from my point of view.

Also to compare the success with the first Iraq war when we liberated Kuwait was ignorance at its best and failed to understand the history of Iraq and the three-tribe mentality that exists within Iraq.

Also my point is that one nation cannot make another nation a democracy. It has to come from the will of the people and usually after a long internal war. Most of Europe appeared to understand this but Americans appeared too caught up in fear and revenge after 9/11 to do an in-depth analysis. We are a new country and I suspect have much to learn about world affairs. Even our own country had to have a revolution with England and a civil war to keep our republic alive.

But I also know that the universe works in mysterious ways and it is my lack of trust in this universal wisdom that often concerns me. As a fairly new nation we are learning what works and what does not work. Example: It will be interesting to see if we discover the fallacy of printing money to fix a system in disarray and then giving that money to the same people that used the existing system to cause the problem.

Could anyone in congress even pass management 101? Do lawyers have to take management classes? Sorry trying to be amusing here.

But I always appreciate yours and others insights as it often causes me to look deep within my own motives.

[GregL]

"So here's my challenge to you Greg. Grow a pair....."

Craig, I used to live in Texas, they had phrase for name calling guys like you. "All hat and no Cowboy." I think the hat fits you.

Adios

[Craig]

Guess my arguments are just too empty after all. I've certainly got no comeback to such a reasoned position. Your cogent explanation of your position, and how it shows the incorrectness of my conclusions is well taken.

[william]

“The question to ask at this point is not whether we should we have done so, but where do we go from here”

This I disagree with when one considers the whole concept of the evolution of consciousness of not only an individual but also a nation. If we would have done some real national soul searching after Vietnam I suspect we would not have been in such a hurry to rush to war. If we cannot learn from our past errors there is little hope for a country.

We may not be able to change the past but we can learn from it. It is called history lessons. The interesting thing is it usually takes many lessons to learn it’s lessons for an individual and a nation.

The universe is always talking to us but are we listening? In this case we were not.

We had some successful wars in the nineties and we thought this one would be a cakewalk. Even more demanding than Iraq will be Afghanistan. For hundreds of years countries have tried to take control of that country only to leave in defeat. Ask Russia about that one but oh we are better than Russia. Pakistan just signed a safe haven treaty with the taliban 100 miles from the afgan border.

Iraq and Afghanistan will be Obama’s Vietnam.

[GregL]

"Iraq and Afghanistan will be Obama’s Vietnam."

I agree. Maybe Obama should be looking more for a way out rather than pouring more troops in, but woe to the US President who doesn't act "tough". We do not seem to have the population behind us there and create more enemies everyday with our collateral damage. I believe that even Alexander The Great ran into tough sledding in Afghanistan and I don't see a modern day Alexander around yet. On the flip side, now that we are there, how to get out and limit the "payback". Obama faces extremely tough challenges mostly not of his making. Lets hope he doesn't make them worse. He has chosen to try a surge tactic. I, for one, hope it can calm things down temporarily and give us a window of escape.

[william]

“He has chosen to try a surge tactic.”

He is very smart ok extremely smart. I suspect he will use this surge tactic like they did in Iraq which is not only more boots on the ground but a payoff of these tribal chiefs not to kill one another.

It is interesting that a country that is broke is using borrowed money to pay off tribal chiefs not to harm one another.

Also I heard all of this in the sixties with the more boots on the ground approach and win the hearts and minds of the people. Take a walk through Iraq and see how well that has worked. Invaders and occupiers are not usually treated that well by a populace. I suspect all those Iraqi gov officials locked up behind the green zone for safe haven have Swiss bank accounts and if a civil war breaks out they will have a plan to live in another country and have all the money they need.

Nation building is a risky endeavor. It can be a boon like 40 years of oil reserves available to Americans or it can bankrupt the country.

[Michael Prescott]

On the issue of nationalizing troubled banks, an op-ed in the Times of London weighs in against the idea.

Suppose a leading bank were fully nationalised, wiping out by regulatory fiat the entire investment made by its shareholders, in the same way as the investors in Lehman Brothers and Fannie Mae were wiped out. It would then be a mathematical certainty that shareholders in all other banks would realise that they risked the same fate. One after the other, the share prices of all other big banks would fall to zero, requiring every leading bank, and ultimately also every leading insurance company in the world, to be nationalised. This was exactly the financial contagion that spread panic in September from Fannie and Lehman and then to every other bank in America, before leaping across the Atlantic Ocean to infect Halifax Bank of Scotland, Barclays, Lloyds and every leading European bank. I call this process Henry Paulson's Doomsday Machine, after the collapse of Fannie Mae and Lehman.

Hmm. Maybe the nationalization idea isn't so good, after all.

[Michael Prescott]

Hey, it looks like former Obama fan David Brooks now agrees that Obama is not a moderate.

But the Obama budget is more than just the sum of its parts. There is, entailed in it, a promiscuous unwillingness to set priorities and accept trade-offs. There is evidence of a party swept up in its own revolutionary fervor — caught up in the self-flattering belief that history has called upon it to solve all problems at once.

So programs are piled on top of each other and we wind up with a gargantuan $3.6 trillion budget. We end up with deficits that, when considered realistically, are $1 trillion a year and stretch as far as the eye can see. We end up with an agenda that is unexceptional in its parts but that, when taken as a whole, represents a social-engineering experiment that is entirely new....

Those of us who consider ourselves moderates — moderate-conservative, in my case — are forced to confront the reality that Barack Obama is not who we thought he was. His words are responsible; his character is inspiring. But his actions betray a transformational liberalism that should put every centrist on notice.

[dmduncan]

"Those of us who consider ourselves moderates — moderate-conservative, in my case — are forced to confront the reality that Barack Obama is not who we thought he was. His words are responsible; his character is inspiring. But his actions betray a transformational liberalism that should put every centrist on notice."

David Brooks = Mr. Magoo. Maybe if he hadn't been all teary eyed over Obama he might have seen this coming. I mean, it's not like this was so hard to see happening given the religious adulation that his supporter's give him.

I had the bizarre thought yesterday that current events seem to be mirroring a chapter straight out of Atlas Shrugged. And no, I'm no Ayn Rand fan.

[Michael H]

I have a great deal of admiration for David Brooks. His conclusions are interesting here as well:

The only thing more scary than Obama’s experiment is the thought that it might fail and the political power will swing over to a Republican Party that is currently unfit to wield it.

Moderates are going to have to try to tamp down the polarizing warfare that is sure to flow from Obama’s über-partisan budget. They will have to face fiscal realities honestly and not base revenue projections on rosy scenarios of a shallow recession and robust growth next year.

They will have to take the economic crisis seriously and not use it as a cue to focus on every other problem under the sun. They’re going to have to offer an agenda that inspires confidence by its steadiness rather than shaking confidence with its hyperactivity.

I'd only add that if the proposed budget goes forward with minimal change, I would expect Obama will be the first of a series of one-term presidents.

[dmduncan]

"...the thought that it might fail and the political power will swing over to a Republican Party that is currently unfit to wield it."

I'm stumped by that conclusion. Is the implication supposed to be that the democratic party IS CURRENTLY fit to wield it?

Democrats are in charge because people are sick of Republicans. That says nothing whatsoever about the democratic party's actual fitness for any job at all.

They won by default, because there really was no way another Republican administration would've been elected, and there was no other choice but democrats.

[Michael H]

It's a good point, dm.

I think Brooks is suggesting that Obama and his support on the left have misinterpreted their victory as a mandate for expansive government, and that if they in fact move in that direction, the moderate center will kick them to the curb - first in the mid-terms, and then entirely in three and a half years - because they'll be as sick of the Democrats as they were of the Republicans this past fall.

It's either that scenario, or the moderates need to take some control right now and temper the administration's ambitions.

[Michael Prescott]

I had the bizarre thought yesterday that current events seem to be mirroring a chapter straight out of Atlas Shrugged. And no, I'm no Ayn Rand fan.

I used to be an Objectivist, though my views have changed radically since then. Still, I also find the current situation looking more and more like the Atlas scenario. Sales of the book have reportedly gone through the roof in the last couple of months, by the way. (According to the Ayn Rand Institute.)

The Wall Street Journal ran an editorial recently in which they ascribed the recent fall of the stock market to a "capital strike" prompted by Obama's big-spending and big-taxing plans. A capital strike is (in economic terms) essentially what Atlas is about.

Although I didn't vote for Obama, I started feeling optimistic about him during the transition. But at this point I'm very discouraged and am starting to wonder how we're going to make it through four years of this guy. The idea of doing all this new spending at a time when the financial sector is imperiled and the government is already taking on massive debt strikes me as colossally foolish.

[Michael H]

The Wall Street Journal ran an editorial recently in which they ascribed the recent fall of the stock market to a "capital strike" prompted by Obama's big-spending and big-taxing plans. A capital strike is (in economic terms) essentially what Atlas is about.

I haven't read the WSJ editorial, but Jon Markman's column yesterday echoes the theme:

Pramod Kadambi wakes up every morning fearing the world has come to an end. He and his wife don't spend money on anything but essentials. Friends who have lost their jobs visit and cry. He sees war or revolution coming. Gold coins and guns are new additions to the household.

An unshaven, out-of-work survivalist in the backwoods of Georgia? Not at all. He's a young medical professional in California earning more than a million dollars a year -- and the new face of the wealthy in America. That makes him the Obama administration's worst nightmare: someone who could help revive the nation's economy but instead has shut down his wallet in stark dread . . .

If the wealthy are taxed at higher rates, as currently contemplated by the Obama administration, and savings rates go to 10% per annum, the formula suggests corporate profits will be cut in half from their peak two years ago. Because earnings at the companies that make up the S&P 500 totaled $84.70 a share in 2007, that would mean forecasts of the stock market need to start with the assumption that earnings will sink to about $42 per share.

If investors are confident that a decline to that level is just a temporary aberration, they will apply a price-earnings multiple similar to what we see today, around 18, and then you get a forecast of 755 for the S&P 500, which is a little higher than where we are now. But if investors fear earnings will continue to slip, then they'll cut the multiple to as little as 9 or 10, as they did in the 1970s, and if you do the math you get a projection of 420 for the S&P 500, or around Dow 4,000.

Yow. Talk like this used to be strictly in the realm of grumpy old men and cuckoo birds, but it's occurring now in smart circles because mainstream economic theories are not adequately explaining consumer and government behavior in this cycle.

Whatever one might think about Ayn Rand and Atlas Shrugged, I still think that she did have a pretty good grasp of how the application of self-interest on a widespread, micro-scale, can lead to macro-effects. Those effects can be evaluated as either good or bad - but I think her main point was that instead of battling against mankind's tendency to look out for himself, we should acknowledge that self-interest is not in itself a bad thing, and construct political and economic systems that work with what are normal and broad tendencies.

Hey, it is what it is. I still say that if Obama's stated agenda is not tempered by some serious moderation, he'll be toast, and it will happen sooner rather than later. Those of us who tend more towards the center or right can begin to contact our representatives and voice our concerns, but most of us won't.

[Bryan]

"The idea of doing all this new spending at a time when the financial sector is imperiled and the government is already taking on massive debt strikes me as colossally foolish."

Foolish by conservative criteria, which *massively* failed us. If there are to be major changes, bring them on. If you're falling, you have to pull the ripcord. If the ripcord fails, then you just carry on falling.

[dmduncan]

"If the ripcord fails, then you just carry on falling."

I think that about sums up the Obama approach. What's plan B? If all this spending doesn't work, what then?

Martial law?

Because we're not going to fall forever. We're going to hit dirt somewhere. And when the dust clears, what's the place going to look like where we are?

It won't look like Shambala. OR Galt's Gulch.

[Michael Prescott]

David Brooks has backtracked somewhat from his criticism of Obama, and today presents the administration's arguments. It's an interesting read, and gives me a smidgen of hope that Obama may not be as bad as I've been fearing.

But only a smidgen.

[dmduncan]

From the article:

"Second, they argue, the Obama administration will not usher in an era of big government."

???

Is the White House making an argument that we are currently small government? Government is a BLOATED BEAST spending money which it doesn't have on things which we would all be better off without.

[Teri]

Michael H, I am very surprised at you for 2 reasons.
First, you used to be very firmly an Obama supporter. He's just got in, and already you doubt him.
Second, you say self interest is useful. This does not tie in with the spiritual stuff.

[dmduncan]

I am more inclined to agree with Krauthammer on this:

http://www.realclearpolitics.com/articles/2009/03/a_dishonest_gimmicky_budget.html

And many of the things we would be better off without are in the defense industry (22 % of the budget?), in developing technologies which can easily be turned against the people of this country without them even knowing. There's even some evidence that it's already happening.

[Michael H]

Michael H, I am very surprised at you for 2 reasons.

First, you used to be very firmly an Obama supporter. He's just got in, and already you doubt him.

I still maintain a high degree of respect for Obama, although I am concerned - as is Brooks and several others here - as to the overall direction his administration appears to be heading at this point.

My expectations regarding Obama's administrative approach revolved around an assumption that he would attempt to build a broad coalition around a moderate center. In several respects, he's attempted to do so, and I haven't abandoned my hope that he will eventually arrive at that.

Still, I think he made a grievous mistake in delegating authorship of the stimulus bill to congress, and ended up with a pork-laden, thousand page document that I can't see as having much, if any, immediate stimulative effect.

In Obama's defense, the man is dealing with issues that, in all honesty, no president since FDR has faced. It's no wonder he's turning grey before our eyes.

Second, you say self interest is useful. This does not tie in with the spiritual stuff.

An adequate response to this would be pretty lengthy, but in essence, it is my contention that spiritual development is ultimately an individual pursuit. The paradox is that once one has transcended a given level of consciousness, their own perception of what the individual actually is grows to embrace much more than they had previously realized, and they will discover that what they define as being in their genuine self-interest is quite different than what they'd anticipated before.

It also seems to me that no matter how well-intentioned leftist policies may appear to be on the surface, they generally amount to an effort to give away fish, while I think that what's really needed is to teach fishing. And one of the most effective ways to teach fishing is to allow individuals to experience the consequences of their actions, whether those consequences appear to be good or bad.

It seems to me that both sides of the political arena are ensnared in an effort to fix what's perceived as going on 'out there', while the real solution to both the external world and the spiritual journey involves developing an awareness of what's going on 'in here'. In other words, if more and more people were to become cognizant of the latter, we'd find fewer and fewer issues to concern us regarding the former.

I have the same sorts of issues with religions and morality. If there was broad interest and respect given to genuine spiritual development, we would discover that the need for rigid edicts regarding morality would soon become rather quaint cultural artifacts.

I don't know if I’ve answered your questions or not, Teri. As I said earlier, I'd probably need several thousand words to flesh it out completely, and not many would understand me anyway.

:)

[Teri]

Luckily, I don't need "several thousand words" to say that concern for others is more important than concern for ourselves.

Putting it into practice is hard, but it's what what we're here for: to raise the quality of our consciousness through interaction with others.

[Michael H]

Luckily, I don't need "several thousand words" to say that concern for others is more important than concern for ourselves.

Is it? The idea that there’s something noble about self-immolation is in need of serious reexamination. I'm not advocating selfishness, Teri. I'm advocating self-interest, which is not a synonymous term.

[Teri]

"self immolation" presumably means "self-sacrifice", which is what Christ did.

As I understand it, there are 3 paths: the path of Knowledge, the path of Service and the path of surrender (the last is advocated by Tolle). I have not yet come across a path of self-interest, though I suppose the path of knowledge probably comes closest.

[Michael H]

Teri, it all comes back to the definition of self. If someone interprets Christ (or any other spiritual master) through the lens of their own ego, they will interpret the master's actions as self-sacrifice. Conversely, when someone begins to realize their own Christ-consciousness, they will interpret those same actions as Self-realization, and they will understand that what the master is actually demonstrating is Self-interest. That's capitalized for a reason.

If we want to see change in others and the world, we need to encourage people to bring about change within. But before we can encourage others to bring about change within, we have to do so ourselves. This is why I see spiritual development as ultimately an individual pursuit – it requires self-interest, even if the self-interest involved revolves around nothing more than a desire for some peace of mind.

I tend towards a libertarian view on political matters primarily because I don’t think that most people will arrive at a desire to change if they aren’t allowed to experience the consequences of their choices. That applies as fully to the folks who brought us this current financial meltdown as it does to those who have been taking advantage of the welfare state for several generations now.

We can throw trillions upon trillions at whatever issues we chose to – but we won’t see genuine and significant progress until we see changes of mind. As I’ve stressed repeatedly before – we are already in a spiritual reality. We always have been and we always will be. What we see around us are the manifestations of the collective levels of awareness and/or ignorance of that fact. At the same time, it’s also true that however each of us, individually, happen to be interpreting those manifestations is a powerful clue to where we happen to be at the moment ourselves.

If things don’t appear to be absolutely perfect exactly as they are, then our choice is either to complain about it and get busy changing others, or look for a higher perspective ourselves. If we arrive at a high enough perspective - individually - then there is a chance (but only a chance) - that others will chose to emulate the behavior that flows naturally from the higher perspective. I also think that if more people arrived at higher perspectives individually, those individuals would begin to access new ideas regarding the solutions to our collective issues - and those ideas would not involve resorting to force in our interactions with others.

When Gandhi suggested that we need to be the change we want to see in the world, he knew what he was talking about.

[Teri]

Nicely put Michael H, but I think you are being disingenuous. When you said,

"but I think her main point was that instead of battling against mankind's tendency to look out for himself, we should acknowledge that self-interest is not in itself a bad thing, and construct political and economic systems that work with what are normal and broad tendencies"

you were not referring to the same kind of self-interest (*spiritual* self-interest)at all, were you? You've just now broadened the definition. Be honest, now!

[Michael H]

You've just now broadened the definition. Be honest, now!

I don't think I broadened the definition, Teri, but where I do think many misinterpret me revolves around the definition of self. I honestly see the self - that would be mine, yours and everyone else's - as the Self - regardless of any given individual's awareness of that fact at the moment.

I don't know if you've ever read Ayn Rand, but I will say that her writings were very influential in regards to my personal spiritual development. I need to revisit her work some day just to more clearly identify how we differ, but I think that it has to do with her failure to understand the true nature of man, although she came perilously close. I still agree with a great many of her ideas on political and economic matters.

I have no idea where I'll eventually arrive on these issues, but where I am right now is in thinking along the lines that the quickest way to coax people towards genuine Self-realization is to encourage as much freedom and liberty as possible in political, economic and all other social institutions. Freedom and liberty necessarily includes the freedom to experience the consequences of one's choices. If you want to run a fifty-billion dollar Ponzi scheme, you should be allowed to experience the consequences as fully as if you want to blow off your educational opportunities, become a drug addict and/or start having babies at fourteen.

We aren't going to engineer a perfect society any more than we are going to control climate change with our puny little intellects. We may arrive at a perfect society though - and I actually think we will, someday - through the application of freedom, coupled with a broad-based sense of encouraging one another to pursue genuine Self-realization.

I recognize the sense of encouragement is lacking at the moment, and that the full application of liberty would likely lead to a messy transition given the still-dominant behavioral view of the self.

Still, it comes down to whether I have faith in people or not, doesn't it? One thing in which I have no doubt at all has to do with the true nature of the Self. I also have no doubt that everyone will eventually arrive at the same understanding. It's just a matter of when.

[Teri]

"If you want to run a fifty-billion dollar Ponzi scheme, you should be allowed to experience the consequences as fully as if you want to blow off your educational opportunities, become a drug addict and/or start having babies at fourteen."

I see where you're coming from, but can't agree: the ponzi scheme (wiping out other people's pensions) and drugs (eg when driving) can potentially destroy the lives of others. The babies are likely to suffer too, if in no other way than that the cycle will likely continue: more babies at 14 for the next generation too. If you really feel like this, you would presumably be happy to live in an uncivilised society.

[dmduncan]

One of the few legitimate functions of government is protecting its citizens from all forms of cannibalism, whether it is the kind practiced by banks, criminals, or foreign powers.

[Michael H]

If you really feel like this, you would presumably be happy to live in an uncivilised society.

Teri, if you interpreted my comment as being supportive of Ponzi schemes, drug addiction and teenage childbirth, I don't think you have any idea where I'm coming from. If the question is how to best eliminate undesirable behaviors, I'm saying that the quickest way is to let people experience what happens when they engage in them.

As I wrote earlier, fully expressing my position and the reasons for them would require a pretty lengthy piece. I’ve attempted to answer your questions as concisely as possible, despite the implications that I’m spiritually inconsistent, advocating selfishness and being disingenuous – only to now encounter an accusation that I’m campaigning for an uncivilized society.

Let’s try a different tack. I’m saying that mankind will arrive at a civilized society only when it’s understood that individual rights must be protected consistently, and that such an understanding would necessarily lead to a small role for government. It’s quite clear that you disagree, so why not articulate how you see the solutions?

I fully anticipate that those suggestions will be honest, selfless and spiritually advanced, leading us all towards a civilized society.