[p2p-research] absense of structural reactions to meltdown, Fwd: ZNet Daily Commentary: What Are They Waiting for? By Danny Schechter

[Ryan Lanham]

Hi MIchel,

This is a complex topic.  First, I would say, I am no classic conservative.
My fiscal conservatism relates to my knowledge of how economies evolve and
how governments work.

I believe in social welfare programmes and especially safety nets.  I
believe in social security programs.  I think all governments should strive
to provide them.

I am, as you know, a Keynesian.  I believe government spending should be
counter-cyclical to the business cycle to mollify adverse shocks from
the business cycle.  I also believe, following Robert Solow, that economic
cycles can be influenced by timed investment--and should be so influenced.

That said, Keynesianism speaks little to sovereign credit.  Governments now
are at the end of their legitimate ropes.  If they exceed that credit too
much, there are currency implications that Keynes did not have to cope
with.  Further, there is general loss of confidence in the state's ability
to provide meaningful funds for its legitimate purposes.  There is always
rhetoric that current money is imaginary, etc., which is to my mind highly
destructive.  Money is the basis of our social reality.  Understanding it is
the chief social science and will be for centuries more.  Nations that
manage money poorly impoverish and endanger their citizens--the worst
outcome of government.

The one thing that almost surely did not cause the current crisis is
government policy.  What may not have lessened is government intervention
done well.

We are now in a stark period.  Truly, even the doomsayers have no real idea
how stark it is because most doomsayers live in the happy world others have
constructed for them with policing, stable markets, good regulations and
minimal corruptions.

There is no solution to our crisis on the horizon and there are new
constraints we've never faced before (climate change and the end of labor).
It feels like an end game.  One assumes there is a "beyond" as we all do,
but I'll be damned if I can see it.  It certainly looks like an unhappy
existance for most going forward unless the rules change somehow through
technology.

Whatever life choices a person makes, whatever political and economic views
they hold, only a sociopath hopes for less propserous and less happy times.
There are many sociopaths, sadly.  Properity has always been about choices.
It still is.  It is the choice to avoid certain pains, and to relish certain
luxuries--travel, learning, mobility, security, etc.

Of course no one wants the planet to become uninahabitable or devoid of
beauty, but it is an easy choice for most of us regarding enhanced human
circumstances and a natural world. I'll take the enhanced human
circumstances every time and I consider myself to be a deep oriented
environmentalist.

That is preface to saying states have three main purposes:

To enable safety and propertity (Life)

To enable the protection of freedoms (Liberty)

To allow people to seek their best lives (Pursuit of Happiness)
Here is what states cannot do in my opinion:

1. Guarantee happiness
2. Guarantee a standard of living
3. Change belief systems fundamentally

Right now states are at the brink of their credit.  If they lose that
credit, they will impoverish their peoples.  So they fail at all three of
their purposes.  Most that will so fail will do it trying to achieve one of
the three things that states cannot achieve (especially in the medium to
long term).

As such, I think states must act now like people who have spent too much.
They must conserve, save, and attempt to recoup wealth.  As a Keynesian, I
believe they must also attempt countercyclical investment to mollify
shocks.  This is extremely hard.  States don't do well with moderate
changes.  They either stay the same or change radically.  Both of those
paths are really bad right now.

I'm not optimistic.  Some will do it...New Zealand is looking like it is
responding in most of the right ways.  Sweden is doing OK.  Canada is
starting to do the right things.  The trick will be balanced, stable social
expansion--a managed capitalism.  That's really hard and requires superb
technocrats and an honest and nationalistic business community.  Few places
have both of those.  To get them, there has to be a new contract
between business leaders and government to be mutually supportive, to be
socially engaged, to avoid creating external costs and other problematic
externalities, and to not hold each other hostage in some sort of game.
Most won't achieve that.  It is very hard.  States don't like business and
vice versa.  That rhetoric is really destructive.  What we need now is the
cooperative environments of China, Sweden, Denmark, New Zealand...and the
old California or Massachusetts...or the even older UK.  It is hard to
maintain.  Greed kills it on the one side, and free riding on the other.





On Wed, Mar 10, 2010 at 8:35 AM, Michel Bauwens <michelsub2004 at gmail.com>wrote:

> hi ryan,
>
> you write: The states doing the right things will look like the following:
> Tight austerity plans.  Smaller government.  Less social welfare.  More
> infrastructure spending with enough social spending to keep people alive and
> basically out of despair.  Big emphases on enhanced productivity and reduced
> costs without outsourcing.
>
> any evidence that policies that slash demand and social welfare actually
> work? The evidence would rather point to the contrary ... countries that
> have followed these IMF imposed policies have done very poorly, and
> countries that went for social innovation and productivity did better ...;
> I'm surprise that you still favour supply push policies that led to the
> meltdown in the first place ..
>
> Michel
>
>
>
>
> On Wed, Mar 10, 2010 at 8:24 PM, Ryan Lanham <rlanham1963 at gmail.com>wrote:
>
>> Not that I am any expert, but I would say we are already in the 2nd dip
>> based on my local data.  Absent intensive Keynesian stimulus by the US,
>> Europe and China, I don't see how we avoid significant contraction globally
>> by late summer...probably 2-5% globally.  The closer it is to 5%...the
>> greater the risk of major political instability in marginal states (e.g.
>> Greece, Iran, Venezueala, Philippines, etc.)  I think it will be much closer
>> to 2%--much depending on China and India consumption patterns.  That will
>> still be stunningly painful.
>>
>> Shipping rates are down.  Currency flows are down.  Housing is slipping
>> again.
>>
>> There is also some evidence consumption in China is slowing...savings
>> rates are up.  If that happens, if China starts to become
>> "Japan-like," there isn't enough government spending feasible that could
>> return the world to a place that avoids significant contraction.  If global
>> contraction reaches a multi-year double digit level, we will see major world
>> system changes.
>>
>> People will be looking for short/easy fixes of which there are none.
>> Consequently, they will make major errors...rapid nationalizations, huge
>> social wealth transfers, etc.  That will accelerate the problem in those
>> states and will disrupt productivity even more.  The outcome will be that
>> the wealthy relocate and the poor become much poorer in the medium term
>> after a short bump.
>>
>> The states doing the right things will look like the following: Tight
>> austerity plans.  Smaller government.  Less social welfare.  More
>> infrastructure spending with enough social spending to keep people alive and
>> basically out of despair.  Big emphases on enhanced productivity and reduced
>> costs without outsourcing.
>>
>> Education will get cut.  It is a too long term solution and radical change
>> is even more on the horizon than ever before.  Healthcare will get cut.  In
>> short, people will be allowed to die.  Green industries will get investment,
>> but it won't be enough to radically drive jobs.  The rich will hunker down
>> and stop spending.  When global tourism radically slows again, you'll know
>> we are in the peak of the problem.
>>
>> I personally doubt that can be avoided now.
>>
>> Ryan
>>
>>   On Wed, Mar 10, 2010 at 4:34 AM, Michel Bauwens <
>> michelsub2004 at gmail.com> wrote:
>>
>>>    What Are They Waiting for?
>>>
>>> March 10, 2010 By *Danny Schechter*
>>>
>>> Danny Schechter's ZSpace Page<http://www.zcommunications.org/zspace/dannyschechter>/
>>> ZSpace <http://www.zcommunications.org/zspace/>
>>>
>>> What will it take?  What are they waiting for? What part of the reality
>>> of a systemic crisis that will get worse don't they get?
>>>
>>> How is it possible that after near three years of economic turmoil, with
>>> possibly hundreds of TRILLIONs down the rabbit hole-not that anyone is
>>> counting or apparently can count-that the geniuses who run our economy still
>>> don't "get" that the sh*t has already hit the fan? How many more jobs and
>>> homes have to be lost?
>>>
>>> Michael Moore is not the only one predicting a second crash. Paul Krugman
>>> is all out words excoriating the Administration for its tepidness. Nouriel
>>> Roubini, who forecast the first meltdown, now says we are in serious danger
>>> of a "double-dip," a lethal combo of rising inflation and deeper recession.
>>>
>>> Woe to us if we can't see the handwriting on so many walls.
>>>
>>> The people in the know know that nothing has been fixed, know that all
>>> the stimuli have barely stimulated, that the new jobs bill will never
>>> generate the number of jobs that are needed, and that the banks have
>>> obscenely been raking in oodles of money thanks to all the financing
>>> taxpayers pumped into their coffers.
>>>
>>> Even as the Obamaites finally get around to proposing a measure to break
>>> up the big banks and erode the notion of financial institutions being too
>>> big to fail, we have the New York Times telling us that Congress does not
>>> have the "appetite"-that's the word they use-to tackle even modest financial
>>> reforms.
>>>
>>> The "appetite" is missing. In the real world of appetites, food companies
>>> are recalling unsafe products every day because the food we eat is subjected
>>> to federal inspections. Not so for financial products.
>>>
>>> The reason? Politics of course, but also the jillions that the financial
>>> services industry  has "invested" in bill killing, compromise-making, and
>>> just plain corrupting the legislative process.
>>>
>>> This past week, the Roosevelt Institute sponsored a conference over at
>>> the Time Warner Center called Make Markets Be Markets
>>> (Makemarketsbemarkets.org) , published a book of essays and heard from a
>>> who's who in the world of influential economists and analysts who gave high
>>> powered presentations, one after another, each more lucid than the next.
>>> There was enough brainpower in the room to save the economy but, alas, no
>>> one seems to be listening. Some business media was there collecting sound
>>> bites but the urgency of the warnings did not transcend  the limits of the
>>> bubble of financial journalism.
>>>
>>> For a long time, I wined about being ignored in not getting heard on the
>>> economic collapse, which of course, I am, but here were people with Nobel
>>> Prizes and PhDs and track records of making millions also being dissed and
>>> pissed.
>>> Setting the stage was Joe Stiglitz who won a Nobel Prize for his work,
>>> and who left the World Bank with disgust over what they do. Stiglitz should
>>> be in Obama's cabinet. Instead he is one of its critics.
>>>
>>> The presentations started off with Simon Johnson, the former chief
>>> economist the IMF taking about the DOOM CYCLE-how we are just going around
>>> in cycles without really addressing the system nature of the crisis. He
>>> writes in the NY Times and on BaselineScenario.com which you should read
>>> every day. He calls the cycle "unsustainable and crazy" and says that "the
>>> destructive power of the down-cycle will overwhelm the restorative ability
>>> of government like  it did in 1929-31."
>>>
>>> Translation: Here we go again.
>>>
>>> And then there was the super-articulate Raj Date who says we have to get
>>> rid of Frannie Mae and Freddy Mac before they get rid of our housing market.
>>> His analysis was detailed and textured. His conclusion simple: "they must be
>>> eliminated." What is the Obama Administration doing about this? Nada.
>>>
>>> It got better when the only woman on the panel, Harvard's Elizabeth
>>> Warren mesmerized the room. She has become a TV fixture because of how
>>> charming, honest and forthright she has been in defending consumers from the
>>> rip offs that we are all menaced by. She is the chairperson of the House
>>> oversight committee on TARP and a leading advocate of an independent
>>> consumer protection agency. She is now watching as Senator Dodd and some of
>>> his GOP cronies try to bury it in the Federal Reserve Bank, a move that many
>>> of the conference criticized in light of the Fed's history of doing so
>>> little to protect the rights of consumers.
>>>
>>> After all the speakers presented their arguments, there were comments by
>>> George Soros, who also criticized the economics profession for missing the
>>> crisis, and businessman Jim Chanos who finally brought the discussion around
>>> to the presence of massive fraud and criminality in our financial markets. I
>>> spoke to that issue which I have just written a book on and made a film
>>> about when I got a chance to ask a question.
>>>
>>> All too quietly, Wall Street firms are being sued for their many
>>> transgressions. A study by Gary Null found that over $430 billion has been
>>> paid to victimized parties by Wall Street firms in over 1500 cases.
>>>
>>> Some examples:
>>>
>>> *  Bank of America has spent $14.9 billion to settle 15 cases alleging
>>> various charges such as securities violations and mismanagement;
>>>
>>> * Citigroup has spent over $13.9 billion to settle 12 cases alleging
>>> various charges including abusive lending practices and involvement in
>>> fraudulent activities;
>>>
>>> * Merrill Lynch has spent $12.2 billion to settle cases involving various
>>> allegations including negligence and mismanagement of funds;
>>>
>>> * Morgan Stanley has spent over $5 billion to settle 11 cases involving
>>> various allegations including failure to disclose material information to
>>> customers;
>>>
>>> * Wachovia has spent over $9.5 billion to resolve allegations including
>>> misleading investors and conflicts of interest;
>>>
>>> UBS has spent $19.5 billion to settle 6 cases with various charges
>>> including misleading investors.
>>>
>>> So much information is now out there but to what effect? What more do we
>>> need to know?
>>>
>>> There is a time for research and a time for advocacy, a time to try to
>>> lobby in the suites and a time for marching in the streets. Students on US
>>> campuses and workers in Greece have been battling the effects of the crisis.
>>>  It is now time to go after the causes.
>>> The public is open to acting. The most recent Zogby poll reports:
>>>
>>> # 32% of U.S. adults say they have "considered moving some or all of
>>> (their) banking from a large national bank to a community bank or credit
>>> union because (they) are unhappy with the policies or behavior of large
>>> national banks."
>>>
>>> # 14% have moved some of their banking in the past year from a large
>>> national bank to a community bank or credit union.
>>>
>>> # 9% of all U.S. adults have moved some of their business from large
>>> national banks as a protest.
>>>
>>> People are pissed, far angrier than the media lets on. The lines are
>>> being drawn. That hard rain is going to fall.
>>>
>>>
>>> News Dissector Danny Schechter is a blogger, author and filmmaker. His
>>> latest work is Plunder The Crime of Our Time on the financial crisis as a
>>> crime story (Punderthecrimeofourtime.com) Comments to
>>> dissector at mediachannel.org
>>> ------------------------------
>>>
>>> *From:* Z Net - The Spirit Of Resistance Lives<http://www.zcommunications.org/>
>>> *URL:*
>>> http://www.zcommunications.org/what-are-they-waiting-for-by-danny-schechter
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>>> thank: http://www.asianforesightinstitute.org/index.php/eng/The-AFI
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>>
>>
>> --
>> Ryan Lanham
>> rlanham1963 at gmail.com
>> Facebook: Ryan_Lanham
>> P.O. Box 633
>> Grand Cayman, KY1-1303
>> Cayman Islands
>> (345) 916-1712
>>
>>
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>
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> thank: http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>
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-- 
Ryan Lanham
rlanham1963 at gmail.com
Facebook: Ryan_Lanham
P.O. Box 633
Grand Cayman, KY1-1303
Cayman Islands
(345) 916-1712
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