At first I had no idea what Glenn Beck was talking about (From the August 23 edition of Premiere Radio Networks' The Glenn Beck Program):
"We're being pitted against each other again. We're being pitted against each other on religion. And I want you to know this is, this is part of the strategy.
This is why we brought up Soujourners, and Jim Wallis, and Reverand Wright, and I told you about social justice. I told you that our religions are being hijkacked.
Religion plays a huge role in the progressive movement. You must have religion. If you can beat down re--... Why do you think they chased God out of the public square? And now Nancy Pelosi's talking about God all the time. That you have the President talking about...bashing the Bible 'Oh, well, who's Bible are we going to listen to now?' And then talking about faith and religion. Why do you think this is all happening?
It's critical. It's critical. And these people Let me say this. When you pervert the founding documents. I think you're a pretty bad dude. But when you pervert the Gospel of Jesus Christ, you are evil.
And when you know. And when you are intentionally doing it for power and control and money and a hidden agenda. And you lie, cheat and steal every step of the way to do it, you are evil.
Now let me show you Jim Wallis. Jim Wallis is a guy from Sojourners who has lead a campaign against me. They are trying to pit our religions against each other. They are trying to... I stood at the feet of Abraham Lincoln yesterday. 'A house divided against itself cannot stand.' They must have us at each other's throats.
I've told you before that this is George Soros money. That this is nothing but a hidden progressive agenda. That social justice as understood by Jim Wallis and Jeremiah Wright and people like him. It is evil. He claims that there's no money coming Soros. If I saw my name smeared on the internet one more time on th... I mean it's become laughable. Because people actually believe George Soros isn't involved in this?
Okay, okay. So I get that he's projecting wildly all over the place. But even knowing that I was terribly confused--and not just because he's a paranoid freak with the attention span of a gnat with ADD.
On the projection side:
(1) He says the left is trying to divide us with religion, because, of course, that's the right's whole game plan. But it's not just the use of wedge issues, and usurpation of individual conscience--stuff that anyone can see with their own two eyes. No, there's an entire hidden battlefield that's the exact mirror image of what Beck is talking about. The right has been involved in a decades-long war against the mainstream Protestant establishment that supported the civil rights movement out of its commitment to social justice. (Talk2Action has tons of material on this, this piece by Bruce Wilson is as good a place as any to jump into the middle of it--lots of links to different facets of it.)
Surprise! Surprise! The stimulus worked! Only problem was it was far too small. That's the message form the latest CBO report on the stimulus (aka the American Recovery and Reinvestment Act [ARRA]):
CBO estimates that ARRA's policies had the following effects in the second quarter of calendar year 2010:
They raised real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent,
Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,
Increased the number of people employed by between 1.4 million and 3.3 million, and
Increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise.
At one level, this simply confirms what Paul Krugman said right at the start--the stimulus was too small (a huge number of economists agreed with that part) and the Democrats were making a huge political mistake, because they'd never be politically able to pass another major stimulus bill to make up for how far it fell short.
Yet, at a deeper level, that's only part of the problem, since "restoring the economy" to its pre-recession level would only have meant recreating a sick, sick, sick economy that was inevitably heading for a crackup. The following chart of housing prices--via Baseline Scenario based on data from Robert Shiller--shows, among other things, just how anomalous and unsustainable the pre-crash economy was, given that housing asset prices were sustaining spending at levels well above people's incomes:
What this inevitably points to--especially in light of its repurcussions for the broader economy discussed in a recenty NYT article, "Housing Fades as a Means to Build Wealth, Analysts Say.", is that we need a whole new foundation for our economy:
"Many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.
"The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.
"More than likely, that era is gone for good."
This was addressed by George Soros talking to BIll Moyers just before the 2008 election. First he explained the need for a fundamental restructuring to preserve the stability of homeowners in the short run (something, of course, that has not been done):
I have been in the battling-the-rich-and-powerful-on-behalf-of-the-poor-and-middle- income business for a very long time now (almost 30 years), and it can get pretty discouraging at times. For one thing, in some news that I am sure will be shattering to you, the rich and powerful have a lot more money. And they have seemed to have a lot more political friends over that era than do the poor and the middle income folks combined.
But hope rises anew from time to time, and there are encouraging signs. The most obvious one, of course, is that we have a President and both houses of Congress led by center-left politicians who will be with the poor and middle income quite a bit more than their predecessors in the Bush White House and the Republican led Congress - not always, of course, but more than the last set of politicians. But my hopes are rising for a lot less visible reasons than that.
More on what those reasons on in the extended entry.
Last night, on Bill Moyers Journal (transcript here), we saw both sides of Bill Moyers. We saw him, if not at his very best, then certainly very, very good, and better than most folks ever get on tv. He interviewed George Soros, and they covered a wide range of big topics in very straight-forward, demystifying terms.
Then in the second half, we saw his bad side. Not the worst, by any means, but the worst in terms of regular features, which is to say, Kathleen Hall Jamieson and her drum-beat "balanced" criticism of the presidential campaign. Jamieson actually does some very good work, and is sometimes extremely sharp. But she also gets lazy, sloppy and/or thoughtlessly conventional at times, and that was certainly the case last night. I'll deal with her segment in a second, briefer diary. But for now, I want to look at the good--not perfect, not spectacular, but definitely quite good side of what Moyers had to offer last night.
It's not really that amazing. But it's clearly stated, and it comes from a guy who's as rich as sin, so calling him a DFH just rolls off his back like water off a duck.
Doug Noland, a financial expert at Asia Times gets exactly what is most irritating -- most irritatingly frustratingly wasteful -- about watching the banker bailout unfold, in the bolded text below:
Over the years, we've been pretty cognizant of the extreme nature of excesses; the extent of system vulnerability; and the expensive bill that would come due with the arrival of the bust. But I want to be especially clear on one thing: I am shocked and incredibly alarmed that all these measures became necessary at such an early stage of financial and economic adjustment. After all, the Dow remains above 11,000 and gross domestic product expanded 3.3% last quarter.
And this gets right to the heart of the matter - where the analytical rubber meets the road. A massive inflation of government obligations; a major government intrusion into all matters financial and economic; and an unprecedented circumvention of free market forces has been unleashed - but to what end?
I believe it is a grave predicament that such a rampage of radical policymaking has been unleashed in order to maintain inflated asset markets and to sustain a bubble economy. Normally, such desperate measures would be employed only after a crash and in the midst of a major economic downturn - not in efforts specifically to forestall the unwind. Not only will such measures not work, I believe they will only exacerbate today's already extreme global monetary disorder. They will definitely worsen the inevitable financial and economic dislocation.
It's frustrating first that the thrust of policy right now is to resist the implosion of the housing market bubble, when HOUSING REMAINS VASTLY OVERPRICED by historical standards. Even more frustrating to watch and wasteful is the effort to resist the implosion of the VASTLY OVERVALUED U.S. stock market bubble, which sits on a mountain of still now VASTLY OVERVALUED debt-based assets. It's just dumb to fight the inevitable drop of housing and stocks to something at least somewhat in line with historical levels. Aggressive 'market/price stabilization' measures should wait till the plummet reaches what should be a floor.
Importantly, Noland goes on directly to blast the monetarists' (who now call themselves the 'mainstream economists') revisionist misunderstanding of what caused and could've prevented the Great Depression. This historical fight exposes the root of the wrong understanding that is motivating our economic leaders' impending incredibly wasteful financial 'rescue' splurge:
I have over the past several years repeatedly taken issue with the revisionist view that had the Fed recapitalized the banking system after the '29 stock market crash the Great Depression would have been avoided. Some have suggested that $4 billion from the Fed back then would have replenished lost banking system capital and stemmed economic collapse. But I believe passionately that this is deeply flawed and dangerous analysis.
An injection of a relatively small $4 billion would have mattered little. What might have worked - albeit only temporarily - would have been the creation of many tens of billions of dollars of new credit required to arrest asset and debt market deflation and refuel the bubble economy. Importantly, however, at that point only continuous and massive credit injections would have kept the system from commencing its inevitable lurch into a downward financial and economic spiral.
It's interesting that George Soros shares many of Noland's views and has also written in resistance to the dangerous monetarist mythology about what caused and could've cured the Great Depression, but more on him down below. . . .
I was on a call this morning with George Soros organized by Steve Clemons of the New American Foundation. Soros is coming out with a new book called The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means discussing what he calls the deflation of the 'super-bubble'. In terms of political news, Soros made it clear he will not be spending as much money on the 2008 election. He believes, as do I, that 2004 was a special decision, and the consequences of 2008 are far less significant. He doesn't like partisan politics, and now seems focused on financial regulation and energy and climate problems.
The call was organized around Soros's ideas on the current financial crisis, which he thinks is the worst since the 1930s. There are many elements to what is going on, but the gist of the macro-economic shift is that the dollar is losing its status as the world reserve currency and the 'mortar' of the world economy will no longer be the American consumer. This crisis is different from previous busts, because the shift in global power constrains the ability of the Federal reserve to lower interest rates.
Soroes believes that the financial market's fall was acute, but is basically over. The problem now is the fall-out, which is going to cascade throughout the economy. People are going to feel it in a nasty recession and further drops in the price of housing, as the market overcorrects to the downside. The crisis was driven in the short-term by a failure of the regulators to exercise the powers they have, to allow a totally unregulated market in financial instruments to develop. The scariest market, he says, is the Credit Default Swaps market, which equals half the entire US household wealth and five times the national debt, and the biggest player there is JP Morgan.
In the past week, I have had the opportunity to ask both Paul Krugman and George Soros what the worst case scenario will look like. Krugman suggested a slightly less bad Argentine style collapse, followed by a pretty good resurgence of growth. In the end, everyone will just move 'one house to the left' as legal wrangling gets fierce. Soros believes that authorities are pretty qualified and won't let the financial system collapse, so he sees the problem as crushing the dreams of the poor and upwardly mobile African-American Latinos buying their first homes. He specifically cited Prince George's County, a wealthy African-American county hit harder by the foreclosure crisis than anywhere in the country. The county incidentally will soon be represented by Donna Edwards.
Soros was clear that this is not a natural cycle, it is an entirely man-made crisis, and it will ripple through the economy and slow down or reverse wealth creation because of a credit crunch. What we need to do, he believes, is establish a clearing house or exchange where all these trades needs to be registered and settled according to well-established rules, until that is cleared up there's uncertainty as to the value of the various unregulated instruments out there, which is why there is a credit squeeze. No one wants to lend because no one knows what anything is worth, and no one knows who the counterparties are on many of these transactions.
In terms of further prescriptions, he thinks we need to minimize the downturn by seeking to limit foreclosures in the short-term. In the longer term, he believes that the American consumer will no longer be acting as the key driver of the global economy (the 'mortar'). The next driver of demand, or the next 'mortar' of the global economy, should be infrastructure investments necessary to reduce and reverse global warming. There's trillions of legacy infrastructure that needs to be overhauled, and that's the only way we're going to find a new global equilibrium.
I believe this is what is called an 'inflection point'.
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