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History repeats itself, but always in combinations of past events.

What today’s debt-ceiling/government shutdown dual crisis represents is a telescoping, within a time period of two months, of similar events that rolled out over an extended two year period in 2011-2012. What took two years to conclude previously, between 2011-2012, in a prior debt ceiling + deficit cutting settlement is now happening in the course of two months, September-October 2013, in today’s repeat of debt ceiling + government budget fight.

Today’s debt-ceiling 2.0 + refusal to approve a government budget October 2013 is similar to events of 2011-2012—i.e. the debt ceiling fiasco of August 2011 and the Fiscal Cliff ‘crisis’ of December 2012, consisting of trillions of dollars of sequestered spending cuts and Bush tax cut extensions.

The prediction here is that, in the settlement to the current crisis coming in the next few days, or week or so at the most, the final terms and details will likely prove remarkably similar to that concluded in August 2011 and December 2012: Massive social spending cuts combined with tax cuts for the few, in exchange for an extension of the debt ceiling and a political ‘armistice’ for Obama and Democrats until after the next Congressional elections.

The differences between the 2011-2012 and today’s 2013 settlement will be the particular focus of tax cuts and spending cuts in exchange for extending the debt ceiling.

In August 2011 the settlement was debt ceiling extension in exchange for an immediate $1 trillion in social program only spending cuts, plus another $1.2 trillion in the so-called ‘sequestered’ spending taking effect January 1, 2013. That was more than $2.2 trillion—or more than twice Obama’s original 2009 stimulus spending of $787 billion. Overlaid upon the August 2011 deal was the permanent extension of $4 trillion of the $4.6 trillion Bush tax cuts that also took effect January 1, 2013. Together the two—sequestered cuts and Bush tax cuts extension—were referred to as the ‘fiscal cliff’.

What the Republicans and its House Teaparty faction together got out of the 2011-2012 debt ceiling plus fiscal cliff settlements was a total of $6.2 trillion in spending cuts and Bush tax cuts (80% of which benefited wealthy households and investors)—$2.2 trillion in spending and another $4 trillion in tax cuts.

What Obama and the Democrats got out of the 2011-2012 deal was a politically convenient agreement in August 2011 from the Republicans not to raise the debt ceiling issue again until after the November 2012 national elections. What Obama and Democrats didn’t get was any tax hikes on the rich in August 2011 they had said was a deal breaker.

What Obama got from the December 2012 fiscal cliff part of the settlement was mere $60 billion a year in tax hikes on wealthy investors. (Actually, it was not even $60 billion, as the fiscal cliff deal included a generous liberalization of the inheritance tax for multimillionaire households, a liberalization of the Alternative Minimum Tax for them, and the ‘super-sweetener’ of the remaining $4 trillion in tax cuts now made permanent forever). Obama and democrats also failed to achieve any reduction in the $1.2 trillion sequestered spending cuts that they had expected, not believing the Republicans would allow those cuts, involving defense spending as well as social programs, to take effect. But those sequestered cuts began taking effect in March 2013. Now, post-October 2013, they are beginning to have their full negative impact on the economy.

No wonder the Teapublican faction in the Republican party eventually went along with both the 2011 debt ceiling and 2012 fiscal cliff deals. They got a big bite of the apple, and a chance for another down the road today. The Obama-Democrat ‘cave-ins’ on both the August 2011 debt ceiling agreement and subsequent fiscal cliff no doubt emboldened the faction to take the even more aggressive stance they have recently assumed in today’s crisis.

Notice in the foregoing remarks there is no reference to cutting Obamacare as key to the settlement deal today. It never was part of any deal. Last August 2013 the Republican strategy was to use the debt ceiling extension as a hammer to further pound out social spending, especially entitlements like social security and medicare, cuts that were left out of the 2011-2012 spending reductions deal of $2.2 trillion. Another difference in today’s repeat of the debt-ceiling debacle will be that the corresponding tax cuts eventually agreed to probably will focus on corporate taxes instead of individual wealthy taxes—the latter now being set up in the tax code overhaul bill moving rapidly through Congress. That tax cut part of today’s deal may also not be made public in an eventual deal, but will be agreed to in principle by the parties for when the legislation on corporate tax cuts (keyword: Tax Code Overhaul) reaches the House and Senate for a vote.

That 2011-2012 Republican-Teapublican strategy resurrected again by the Republican leadership this past August 2013 was essentially the same as its prior 2011-2012 strategy. What happened was the Teapublican faction of the party intervened in September 2013 and injected its pet provision of defunding Obamacare into the mix, thereby upsetting the timetable and the process for another second debt-ceiling/spending reduction deal this second time around. Negotiations since September may therefore be viewed as attempts by the Republican, Obama and Democrat leadership—with massive corporate lobbying and pressure in the background—trying to get the negotiations back on track with the original process and objective of debt ceiling extension for entitlement cuts plus corporate tax reduction.

The recent Teaparty grandstanding on Obamacare has been for the media and public, with the goal of enhancing their 2014 midterm election results within the Republican party as well as in general. They have now accomplished this. The Obamacare issue was never a serious possibility. They will now retreat.

In the past week a shift back to the original strategy and process—of trading off debt ceiling extension for spending (entitlement) cuts and taxes (cuts for corporate America) has begun to emerge. A weekend ago Boehner signaled such in his round of TV press show appearances. Teapublican presidential candidate, Paul Ryan, trying to keep a foot in both Teapublican and Republican leadership camps, followed Boehner with a similar focus of ‘lets focus more on general spending and entitlement cuts’ in a lengthy Wall St. Journal editorial. Even Corporate radicals like the billionaire Koch brothers, supporters and funders of various radical right causes, published a widespread commentary that Obamacare was not the real issue—that spending and tax cuts for corporations were the key issue.

And today, Senators of both parties are trotting out to give press interviews to the same effect. As conservative Republican Senator, Bob Corker of Tennessee, declared today to a Bloomberg interview: “for the past two months we’ve been focused on the wrong subject”. That correct focus “is spending cuts”.

On Monday, October 14, the real bargaining and ‘end-game’ to the current crisis began. Obama held closed door meetings with Boehner and Senate Republican leader, Mitch McConnell, and with Senate-House Democrat leaders, Harry Reid and Nancy Pelosi. Now the real deal details and terms will be hammered out. It will, this writer predicts, result in more spending cuts, especially social security, medicare and Medicaid, as well as an understanding and consensus to cut corporate taxes when the tax code overhaul bill comes to votes in Congress and for Obama’s signature.

One should not forget that Obama has been, and continues to be, a strong advocate of cutting the corporate tax rate from 35% to 28% and providing ‘relief’ for multinational corporations’ tax rates. Obama has also already indicated cuts of $630 billion in social security and medicare in his 2014 budget. This is the starting point for the ‘original process’ negotiations that have been temporarily derailed by Teapublican grandstanding, now coming to an end.

The deal may include some token concessions to Teapublicans in the House as well. Perhaps the already offered repeal of the medical device tax. Perhaps some further exemptions to Obamacare for business and wealthy individuals. A long list of such concessions to exempting and postponing parts of Obamacare have already been unilaterally made by Obama since the beginning of this year. Difficulties in the rollout of Obamacare may encourage him to agree to more. There may even be a short delay of a few months in the implementation deadline for the Obamacare act.

But the final deal to be struck in 2013 will appear more like the prior 2011-2012 deal of spending cuts and tax largesse for the wealthy. This time seniors and retirees will be the primary target of the spending cuts, while corporations get the tax cuts instead of wealthy individuals.

As this writer wrote in late 2012 when the fiscal cliff fears were being whipped up by both parties and the press, what was going on at the time was a ‘Well Orchestrated Dance’ between Obama and the Republicans. (see ‘Fiscal Cliff: A Well-Orchestrated Dance’, December 18, 2012, at the blog jackrasmus.com). A deal was inevitable by year end 2012, it was predicted.

Today the leadership of the two wings of the single corporate party have entered into final negotiations again, after a brief interruption by the Teapublicans ‘cutting into’ their cozy dance. The latter are about to leave the dance floor, however, and the well orchestrated dance now begins anew.

Dr. Jack Rasmus
Monday, October 14, 2013

Jack Rasmus is author of the 2012 book, ‘Obama’s Economy: Recovery for the Few’, Pluto Press, and host of the weekly online radio show, Alternative Visions, on the progressive radio network. His website is http://www.kyklosproductions.com, his blog, jackrasmus.com, and twitter handle @drjackrasmus.

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The economic ignorance of the Teapublican faction of the Republican party in the US House and Senate is perhaps exceeded only by the similar ignorance of its economic advisers.

Appearing in the public press in recent days is the latest ‘brilliant’ Teapublican view that a default by the US government on paying interest on its debt would not have a negative impact on the US or global economy.

Both the US and global economies are already slowing noticeably, with the Federal Reserve in the US continuing to downgrade and lower its estimates of future US growth, and the IMF doing the same for growth rates in China and the rest of the world. The Teapublicans claim a US debt default would not impact these already negative trends.

While it is true that the US government will not completely run out of money with which to pay its debts on October 17, 2013, as Treasury Secretary, Jack Lew, has publicly stated, it is equally true that it will definitely do so sometime between October 24 and early November. Thereafter, some funds will continue to come into the government, but not nearly enough to pay all its bills. That will force the Obama administration to choose between what it will pay: either bondholders who own US debt or grandma and grandpa on social security. Teapublicans no doubt want to force Obama to make that ‘Hobsons’ Choice’ (i.e. damned if you do and damned if you don’t). Teapublicans will argue he should pay the bondholders first, and forego paying social security. It’s their way to start cutting social security before they even negotiate an official reduction in it with Obama.

To quote one Teapartyer’s statement today, Republican Representative, Joe Barton, of Texas: “We have more than enough cash flow to pay interest on the public debt, so there is no way we’re gong to default on the public debt unless the president of the United States intentionally does so”.

Such statements by lesser known Teapublicans were followed up today in the business press with an article by Teapublican notable, Paul Ryan. Ryan made it clear that the focus of the debt ceiling discussion was to provoke further concessions by Obama on Social Security-Medicare cuts. US House radicals thus are attempting to put Obama in a negotiating box: either he agree to cut Obamacare or to cut Social Security-Medicare.
What the Teapublican faction in all their economic ignorance don’t understand, however, is that the psychological effects of a default—or even a near default—on the US and global economy will prove significant. One does not have to wait for a complete default for that to happen.

What then are some of the possible impacts?

First is the prospect of rising interest rates. Interest rates have already begun to rise, starting on a base that has already risen since the US Federal Reserve’s bungled attempt to signal over the past summer its intent to begin reducing (tapering) its Quantitative Easing (QE) $85 billion a month liquidity injections. That Fed ‘faux pas’ has already driven up long term rates by more than 1%, thereby causing an abrupt halt to a very timid US housing recovery earlier this year. In the past month banks and mortgage servicing companies have already announced thousands of layoffs in their mortgage departments, signaling the virtual end of that housing recovery. Further interest rate hikes, short and long term, on top of the Fed’s recent bungling—which will now certainly occur as the default approaches—will all but ensure the end of any housing recovery in the US.

Short term rate increases will most likely accelerate further throughout the month of October. That includes, in particular, Treasury bill rates which will in turn impact other rates. ‘Other rates’ include the critically important ‘Repo Market’ rates. Destabilizing the repo market is a dangerous game. It is likely the locus for the next financial crash, the analog to the subprime market that was the center of the last financial crash. Teapublicans are thus playing a dangerous game, one that may well in a worst case scenario precipitate another financial instability event on the scale of 2008.

Rising interest rates also mean the end of the latest stock price and junk bond booms. In itself, that doesn’t affect average folks much. But the psychological impact of a rapid decline in asset prices can, and does, spill over to consumer and business spending. That leads to layoffs, in a US job market that is, at best, producing only part time, temp, and low paid jobs as it is.

Rising rates and an even weaker job market in November-December will translate into slowing consumption, which is already showing signs of weakness in August-September. Retail sales in general will weaken still further as a consequence of the debt ceiling default, as will an already ‘long in the tooth’ auto sales cycle.

The negative impact of debt default on consumption is already becoming evident in recent weeks. A Gallup Poll in recent days showed consumer confidence dropping precipitously. While some argue confidence surveys are typically volatile and unreliable as indicators of consumer spending, that is not as true for abrupt and significant movements in confidence indicators. That may now be happening, as the public begins to focus on the dual crises events.

The recent Gallup poll in question fell to -35 from a prior -15. This compares to -56 during the August 2011 worst period of that prior debt ceiling debacle. During the worst period of October 2008 the index was -66. Already falling significantly early in the current crisis, one can estimate where the -35 current poll will be by October 17-24 should the crisis not be resolved by then. We will almost certainly be in the August 2011 territory, when the third quarter US GDP nearly went negative (and did so if the GDP deflator was substituted with the CPI index for that quarter).

Globally, the approaching debt ceiling crisis has already provoked widespread public responses by foreign governments, warning a potential default by the US would have dire consequences for US debt holdings and future purchases. China, Japan, and the IMF have all raised warnings in recent days. If default occurs, then US bond rates will rise even further and faster than at present, raising a real question whether they will continue to purchase US Treasury debt when the price of their holdings are declining significantly in the wake of a default.

There are also important implications of a default (or even near default) for the Eurozone’s own current economic recovery and its still very fragile banking system.

Yet another negative impact globally will be a decline in Euro exports. A default situation would result in the US currency losing value, causing a further rise in the already fast appreciating Euro currency. That trend would challenge German and Euro export growth and therefore that region’s tepid 0.3% last quarter’s recovery.

Another problem potentially to grow worse is the Euro banking system. The Eurozone’s version of QE-the LTRO liquidity injection policy of the past year amounting to more than $1.5 trillion-will soon need another LTRO II injection by the European Central Bank in a matter of months. In addition, more than $1 trillion of the LTRO I will need to be refinanced soon. Nearly all the major banks in Italy, for example, have yet to repay anything of their share of the LTRO $1.5 trillion and will need further liquidity in coming months. Rising interest rates from a debt default in the US will spill over to Europe, thus raising the costs of LTRO II, as well as the financing of much of LTRO I. That will cause further fragility in the Euro banking system and economic recovery there, especially for the highly fragile Italian banks.

For Japan, its recent export gains would also slow, at a time when it has decided to raise taxes while suspending structural economic reforms.
Currency volatility in emerging markets would also intensify from a debt default in the US, likely causing a retreat once again in real growth in those markets, just a few months after their recent ‘stop-go’ provoked by US Fed QE policy uncertainties this past summer.

Throughout the past 18 months, this writer has forewarned that a fragile US economic and global recovery-not nearly as robust as some maintain-is susceptible to a ‘double dip’ recession in 2013-14 should one or more of the following negative ‘tail events’ occur: first, a renewed banking crisis in the Eurozone or elsewhere; second, significant further deficit cutting in the US; and thirdly a continued drift upward in US long term interest rates as a consequence of QE tapering or other events. While it appears the Euro banking crisis has temporarily stabilized—except for Italian banks perhaps—the deficit cutting and interest rate trajectory in the US are very real and serious trends that may yet precipitate a descent into a double dip condition in the US economy.

And if the Teapublican faction in the US House of Representatives managers to prevent a resolution of the debt ceiling issue into the latter part of October, then the economic consequences for both the US and global economies will be severe, and may even prove sufficient to precipitate a double dip recession in the US.

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Last week, George W. Bush’s presidential library was dedicated. The Media were there in droves. So too were presidents Obama and Bill Clinton. They were all buddy-buddy, smiling, shaking hands and mutually jovial in the realization, no doubt, of the successful implementation of their very similar policies of the past 20 years–policies which, of course, have their ultimate origins in their common policy ancestor, Ronald Reagan.

The policy differences between the three (and Reagan) are far less than the similarities. It’s all just a matter of degree and emphasis. GW Bush, however, represents an extreme in that common spectrum. The damages to the US and global economy by the Bush regime have been almost immeasurable, and continue to this day, as they will for years to come.

Liberal economist, Paul Krugman, briefly recounted some of the more momentous damages in his recent column. But a brief column cannot do justice to the full scope and severity of George W. Bush’s toxic legacies.

This writer wrote a lengthier assessment back in December 2008 of the Bush Ten Toxic Legacies (a short list). Given all the hoopla about Bush and his library dedication (and the accompanying attempt to resurrect his reputation surrounding the event), I thought it was appropriate for readers to review in more depth and detail just what George W. Bush had done to destroy the US economy and US society, written by yours truly in December 2008. That assessment is as follows:

“GEORGE W. BUSH’s TEN TOXIC LEGACIES:

“Bush’s First Economic Legacy: The Mountain of Debt

During Bush’s two terms in office more than $3 trillion have been poured down the black hole of wars in Iraq and the Middle East. More than $5 trillion has been served up in tax cuts for corporations and the wealthiest 10% households in the U.S.

According to U.S. Federal Reserve Bank data, since Bush assumed office in January 2001 Government debt levels have risen by more than $3 trillion. But that’s only the total as of the end of March 2008. It does not yet include the cost of bank bailouts this past September: $300 billion for Fannie Mae/Freddie Mac, $85 billion for the insurance company giant, AIG, and the infamous $700 billion ‘TARP’ (Troubled Asset Relief Program) bailout at the close of the month. The September bailouts thus amount to another minimum $1.085 trillion.

The above $1.085 also doesn’t include pending bailouts by the U.S. government’s FDIC (Federal Deposit Insurance Corp.), the agency that is tasked with closing down failed banks and reimbursing depositors. Banks like IndyMac and others. As of the end of September, The FDIC has only $35 billion in available funds remaining for additional bailouts. It is potentially liable for 8,600 banks in the U.S. with deposits and assets totaling $13.3 trillion. It expects 800-1000 regional and smaller banks to fail in coming months. Its bailout this past summer of Indymac Bank cost $8 billion alone. After the November elections, it will have to ask Congress for hundreds of billions, and perhaps even a trillion or more, in additional funding to cover bank failures yet to come. And that’s only banks! What happens when large hedge funds or a large pension fund goes under? Will the Government bail them out as well? It seems anyone with a corporate balance sheet is now eligible for a Government-Taxpayer income transfer.

For example, non-financial corporations have already begun to queue up at the bailout trough. The three big US auto companies have just been handed $25 billion by Congress, in a separate bill that quietly slipped by the public and press in September, amidst the cacophonous wailings for bailout assistance by banks and financial institutions. Even foreign auto makers doing business in the U.S. are now demanding a piece of that pork as well. Like hogs in a pen, Corporate America’s lobbyists, financial and non-financial alike, noisily rush to the fence as the farmer approaches with his slop-pail of goodies. And it’s only the beginning. Corporate defaults are expected to rise tenfold in the next eighteen months, according to Standard & Poor’s, the corporate rating agency.

But there’s still more trillions in this Bush mountain of debt legacy picture. Between 2002 and 2007 the ‘subprime’ mortgage loan crisis was created by the Bush administration. Total mortgage debt in the U.S. more than doubled, rising from $5 trillion in 2001 to more than $11 trillion in 2007. The poor quality subprime and other risky mortgage loans amounted to approximately $2 trillion of that $6 trillion.

The Bush administration was forewarned time and again from 2003 on, by regulators and elected officials alike, at both federal and state levels, that the subprime situation was a time-bomb. Bush not only did nothing but actively discouraged federal intervention. The Bush administration officials at the Securities & Exchange Commission, SEC, in particular were instructed to look the other way as Banks set up ‘shadow banks’ operated off their regulated books. The shadow banks, called Structured Investment Vehicles, or SIVs, served as the trash receptacles in which various securitized bad subprime mortgage bonds were stuffed. Cooking separate books like this, off ‘balance-sheet’ as it is called, was precisely what CEOs and CFOs at Enron went to jail for a few years earlier. But similar behavior at banks and financial institutions in the case of subprimes was apparently not a problem for the Bush administration. When certain investigators and prosecutors got too close or appeared to have too much success, such as ex-New York attorney-general and governor, Eliot Spitzer…well… the FBI found a way to remove him from the scene.

Bush directly contributed to the subprime bust and financial crisis in yet another way. This required the active assistance of Federal Reserve (FED) Chairman, Alan Greenspan. In 2003 Greenspan was awaiting reconfirmation of his position at the FED by the Bush administration. The economic recovery from the 2001 recession had stalled by 2003. After a weak recovery in 2002, job growth was declining once again, even though jobs had still not recovered to pre-2001 levels. Bush was intent on going to War in Iraq. And 2004 elections were but a year away. The economy needed a special boost.

Bush-Greenspan struck a partnership that led directly to the subprime bust. Here’s how it happened: Greenspan and the FED accommodated Bush by lowering interest rates to 1% and then keeping them there far longer than was economically justified in any sense. The Bush-Greenspan strategy paid off for both partners. Super low interest rates produced a housing and commercial property driven economic boom from 2003 to 2006. Greenspan was awarded with reappointment as FED chairman by Bush in spring 2004 and Bush got his economic over-stimulus in time for the November 2004 elections. Financial speculators, banks and the mortgage industry raked in superprofits. They were able, as a result of Greenspan policies, to borrow virtually free money from the FED, which they then ‘leveraged’ to purchase ten times more volume of subprime mortgage bonds. Some of the more aggressive Investment banks, like Bear Stearns and Lehman Brothers, leveraged themselves 30 times or more. Greenspan’s 1% interest rate policy helped fuel the speculative excesses in the mortgage industry that created the subprime boom of 2003-06. When the FED finally began to raise rates again in 2005-06 it provoked the subprime bust of 2006-07. The end result of it all was a record housing price spike from 2004 to 2006, followed in turn by the consequent subprime mortgage price collapse.

In the process of borrowing for leveraging and housing speculation, banks and financial institutions added roughly $8 trillion in new debt during the first seven years of Bush’s term–$6 trillion of that during the subprime speculative boom period of 2003-07.

But there’s still another $ trillion to account for. That’s the amount of new credit card debt that American middle and working class consumers also took on since 2001. It is a lie and misrepresentation that consumers have been increasing their credit card debt in order to engage in spending on luxury and unnecessary items. Most of credit card debt has been taken up in order to pay for big ticket necessities, like college education for children, payment for medical bills their employer insurance plans no longer cover, for medical services by those no longer able to afford insurance at all, for basic transportation needs, for general cost of living by retirees no longer able to survive on social security, and so on. The credit card has replaced the annual wage increase that many employers used to but no longer give. It has substituted for wage increases that unions, now but a shell of their former selves, used to negotiate but no longer can. Credit cards are now relied upon by the more than 40 million workers who used to have full time permanent jobs but now have to make due with lower paid part time or temporary work; and by the more than 8 million workers whose once decent paying manufacturing jobs have gone offshore and have had to accept lower paid service jobs.

To the $3 trillion in government debt was thus added $6 trillion in household mortgage debt, $8 trillion in banking debt, another $1 trillion in new consumer credit card debt, and $3.5 trillion in additional non-financial business debt. A total of more than $21 trillion in accumulated debt of various kinds over the course of Bush’s term in office. That’s a stack of $500 bills 3,297 miles high; or, roughly the distance from New York City to London.

Second Economic Legacy: Financial System Collapse

The ‘unwinding’ of the $21 trillion in net debt accumulated during the Bush administration is the direct, root cause of the current financial crisis.

The write-downs and write-offs by banks and other financial institutions, the bankruptcies by companies and consumers, the losses of home values, the foreclosures, etc.—all represent the ‘unwinding’ of that record level of $21 trillion new debt accumulated since Bush took office. The September bank bailouts, from Fannie Mae to TARP, represent an effort by the US government on behalf of banks and financial institutions to transfer the cost of the banks’ $8 trillion debt unwinding from their banking friends to the general taxpayer. More specifically, the September bailouts represent a strategy by Finance Capital and America’s corporate elite to shift a major portion of this debt from their corporate balance sheets to the ‘public balance sheet’ and taxpayer.

But the bank bailouts will not stop the debt unwinding. They do not address the fundamental causes of housing and commercial property price collapse underway since the beginning of the year and now accelerating. Housing prices have yet to fall another 20-30%, and new phases or stages of the financial crisis will continue to emerge. Furthermore, housing deflation will continue to spill over to the commercial property market, to the stock markets that have yet to fall another 20% as well, and eventually to producer and consumer prices and wages should the recession prove deep and long. The bailouts only relieve the banks of their share of the pain of that collapse. Bailouts like those enacted in September are designed primarily to transfer the costs of the crisis—from big banks, financial institutions, and other corporations and their investors to the general taxpayer, worker, and consumer. But shifting the ‘bad’ debt from private to public balance sheets does not eliminate it. The only thing settled by the bailouts—TARP, Fannie Mae, AIG, and others—is who will pay for the crisis, not how to end the crisis.

Once a fundamental debt-driven financial crisis gains momentum it is not easy to stop. The US Federal Reserve’s strategy has been to throw ‘liquidity’ at it. Since December 2007 the FED has committed nearly a trillion dollars in special and emergency loans—to no avail. Time and again the FED has upped the ante—and the crisis has deteriorated further. It is amazing that the current chairman of the FED, Ben Bernanke, has not learned that throwing liquidity at the problem, i.e. a money supply solution, is not working after a year of such repeated attempts. The problem is not the balance sheets of banks and financial institutions; the problem is the ‘balance sheets’ and insufficient incomes of workers, consumers and homeowners—i.e. a demand side problem. The financial crisis is not a liquidity crisis. It is a solvency crisis. It is a general systemic crisis and a deepening crisis of confidence in the financial system itself.

The debt-driven financial implosion is thus the second major economic legacy of the Bush administration. What Bush has left the nation is a classic Debt-Deflation crisis that has resulted in a near freeze up of the entire financial system. The last time this occurred was 1929-34, and before that in the 1870s and the 1890s. Moreover, the Bush legacy of financial collapse is not finished. It will continue to reverberate and make itself felt for years to come.

Third Economic Legacy: Epic Recession

The direct consequence of financial crisis and implosion is a general ‘credit crunch’. A ‘credit crunch’ is a system-wide severe and sharp contraction of credit. A credit contraction has been progressively growing in the economy since last January. A credit contraction occurs when banks and financial institutions have, or expect to have, significant losses due to bad loans and investments, and therefore are increasingly reluctant to loan out reserves they may have on hand. They are uncertain they may need the cash on hand and reserves to cover anticipated losses and prevent becoming technically bankrupt if their losses exceed their reserves. Over the past year financial institutions have step by step tightened their lending terms. But even the slow down in lending hit a wall and entered a new, more intense and serious stage with the financial events of September—i.e. a credit crunch. In the wake of the collapsing of Fannie Mae, Lehman Brothers, Merrill, AIG and others, in September credit market after market began to freeze up and virtually shut down

From housing and commercial property markets, to industrial loans, to municipal and corporate bonds, to commercial paper, and even markets in which banks loan to each other, such as Libor—all began to shut down in September. There is no inter-bank lending market at present in the U.S. or even globally for that matter. They have shut down. The FED and other central banks have become, in effect, the only banks willing to lend to other banks. Even money markets are contracting. Money market funds, mutual funds, pension funds, and hedge funds are all in the process of contracting and reducing lending.

The credit crunch is the transmission mechanism by which the current financial crisis translates into a recession. It is the linking event. Financial crisis and recession are therefore but two sides of the same coin, driven by the same set of fundamental causes. The debt-deflation drives the bank, consumer and corporate losses, which results in the credit crunch. Without available funds to borrow, or even borrowing at extremely high rates, businesses in turn begin to cut back, announce mass layoffs, and then shut down or go bankrupt.

The extreme levels of accumulated debt since 2000 has produced a financial crisis correspondingly severe and unlike anything since 1929-34.. The severe and protracted financial collapse has created a credit crunch of equal historic dimensions as well. So there is no reason to assume the recession now emerging will be anything less historic or severe. The current financial crisis and credit contraction is producing a recession of equally deep scope and magnitude—i.e. ‘Epic Recession’—as I have called it last June in an earlier article in this publication. An Epic Recession of particularly long and/or deep duration that shares characteristics of a typical postwar recession but also characteristics of a classic Depression similar to 1929-34, 1873-78, or 1892-97. A recession that is fluid and unstable, and can easily accelerate in the direction of a bona fide Depression.

What Bush has therefore bequeathed the country is an economic crisis of historic proportions—in terms of debt, systemic financial collapse, and Epic recession. In so doing, Bush has turned the clock back on the American economy more than a century.

Fourth Economic Legacy: Record Budget Deficits and Fiscal Crisis of the State

With bailouts, with expected losses in tax revenues in 2009 due to the now deepening recession, and with the certain need for further fiscal stimulus by the federal Government to save State and Local governments from bankruptcy and provide unemployment insurance for the millions more jobless to come—the next U.S. budget deficit will easily double from its current projected level of around $500 billion. (Yes, that’s another $1 trillion!) A mind-boggling $trillion dollar budget deficit that will all but ensure that, whoever wins the November 2008 election, few if any of their campaign promises or programs will see implementation. Instead, a national economic ‘austerity program’ will likely be the agenda come January 2009 regardless who wins. Come January 2009, critical programs like national health care reform, student loans, sustainable environment, jobs creation and protection, foreclosure mortgage relief, retirement systems reform, etc. will all be sidelined more or less permanently, or at best proposed by the new President in only token form with insufficient funding.

The fiscal-budget crisis of the US government that now looms large on the horizon also has potentially enormous consequences for the non-financial economy. The massive budget deficit is the consequence thus far of three primary causes: the $3 trillion Mideast Wars, the $5 trillion tax cuts for corporations and the rich, and now more recently the multi-trillion, still rising bailouts of finance capital at taxpayer expense. A fourth and fifth cause will balloon the budget deficit further. The fourth is the deepening recession itself, which will result in a major shortfall of tax revenues to the federal government. The fifth is need for the federal government to spend significantly more in order to stimulate recovery from the downturn.

Very little to date has been expended by government to help consumers and homeowners and thus stimulate demand to generate any recovery from recession. The depth of the fiscal-budget crisis may thus neutralize to a large extent the ability of the government to engineer a recovery from the recession. Monetary policies of low interest rates have clearly failed to have any effect on recovery, and the FED has little further leeway to lower interest rates in any event. Traditional monetary policy has clearly failed. The full burden of recovery is thus now shifted to Congress, the President, and fiscal policy. But can the government—having wasted so much on Wars, tax cuts for the rich, and bailouts—still afford to stimulate the economy given the pending trillion dollar deficits? That kind of fiscal spending constraint did not exist in 1929-33, whereas it now clearly does.

As the fiscal crisis deepens, it may have no recourse but to pull out of the wars it can no longer afford, find some way to raise taxes on corporations and wealthy investors, and slow the free flow of bailout money to the banks. However, it is highly problematic that Congress and the new President will have the political will to do any of the above.

Trillion dollar budget deficits may also have serious consequences for the U.S. economy in a global sense. It means the US government will have to borrow much of that trillion deficit from foreign sources—central banks, banks, wealth funds, and foreign investors. If it cannot borrow, it will have to print the money. But will foreign sources want to loan that amount to the US? Perhaps not, if they believe the value of their loans might decline overnight. But if they do not, it may mean a collapse of the U.S. dollar as a world currency. And that will in turn hasten the decline of the U.S. dollar still further, in a vicious downward cycle. If the U.S. government cannot borrow enough to cover the trillion deficit, it will have no recourse but to turn to printing money. That will lead to an explosion of inflation, a further decline of the dollar, and even less willingness by foreign sources to loan to the U.S., and so on. In short, the fiscal crisis legacy of Bush carries the very real risk of spawning a consequent U.S. currency crisis of epic dimensions as well.

Fifth Economic Legacy: Chronic Job Loss and Jobless Recessions

More than 3 million US workers have lost jobs to China alone during the two Bush terms, and another million have been lost due to free trade with Mexico, Central America and Canada. Bush’s first recession in 2001 resulted in loss of millions more jobs. It took 48 months, four years, just to return to employment levels that existed in January 2001 on the eve of Bush’s first recession. It was the longest ‘jobless recession’ on record in the post world war II period. We are now in the third Bush jobs recession. The first occurred between 2001-2002. A brief and weak recovery of jobs followed in 2003, followed in turn by another jobs decline in 2003-04. It was not until just before the 2004 elections that job levels fully recovered. By late 2007, after just a brief few years of jobs growth the economy once again began to gush jobs at an alarming rate. After three jobs recessions under Bush, it now appears jobs recessions are becoming endemic to the US economy.

The most recent jobs recession began in 2007 and now has begun to accelerate once again. Officially, more than 750,000 jobs were lost through September in 2008. The actual number is much higher, however, given the conservative way the US government calculates unemployment. For example, in September the government estimated 159,000 jobs were lost. But 337,000 part time workers were hired that month. That means many tends of thousands of US workers were cut back from full time and rehired as part time. Part time work should represent a ‘half’ of job loss, but the government counts part time and fully employed. Since January 2008 at least another 750,000 part time workers were hired. The true job loss since the start of 2008 is thus closer to 1.5 million than the estimated official 800,000 or so.

The Bush jobs legacy has thus been one of shifting more jobs offshore as a result of free trade policies, weak and brief job creation during recoveries from recessions, at least three ‘jobs recessions’ during his watch, and the replacement of millions of higher quality full time jobs with lower paid, lower benefits (or no benefits) part time and temporary jobs. It is an abysmal legacy that explains a good deal why 91 million middle-working class households’ pay and incomes have stagnated or declined.

Sixth Economic Legacy: Middle-Working Class Earnings and Income Stagnation

The real weekly earnings of the 91 million households in the U.S. earning—i.e. 80% of all households earning roughly $80,000 a year or less—are less today than when Bush took office. To maintain standards of living these households—those that constitute the middle and working class—have out of necessity turned to credit cards, refinancing their mortgages when it was possible, and working second and third part time jobs. The chronic loss of jobs due to free trade and repeated jobless recessions, the shift to lower paying service jobs, and companies transferring workers from full time permanent employment to more part time-temporary jobs explains a good deal of the stagnant or declining incomes. But not all. The decline of unions and effectiveness of collective bargaining during Bush’s term has also contributed to the income stagnation, as has the shifting of the cost of rising health insurance, deductibles, and copayments from employers to workers during Bush’s term.

In stark contrast to the Bush legacy of stagnating and declining earnings for the 91 million as a group, the Bush legacy has meant turning a blind eye to multi-million dollar, and even billion dollar, CEO pay packages—including those granted bank executives who received multi-million dollar payoffs even when their companies crash and burn. No wonder the general public were incensed this past September with Treasury Secretary, Paulson’s, proposal for $700 billion TARP bailout! That bailout failed—and continues to fail—to provide any effective constraints on Executive Pay or CEO ‘golden parachutes’. The obscene, uninterrupted, and historically unprecedented explosion of executive pay is thus one of the more visible hallmarks of the Bush economic legacy.

Seventh Economic Legacy: Regulatory Chaos and Endemic Corporate Corruption

Some argue the current financial crisis is the product of financial industry deregulation. But that is only partly correct. Deregulation is only an ‘enabler’ of the crisis, not a fundamental cause of it. Deregulation has allowed the banks to set up ‘shadow’ institutions, as noted above, in which to hide and bury their ‘junk’ securities. It has spurred the process called ‘securitization’, in which bad loans were bundled with other bad or good securities, cut up into 5 to 15 pieces, marked up in price to make a superprofit, and sold and resold around the world to other central banks, banks, funds and private investors. Deregulation allowed banks to work with mortgage lenders to generate record quantities of bad mortgages; allowed banks to spread contagion in the name of spreading risk; permitted excess leveraging by financial and non-financial corporation alike. But deregulation means nothing if debt is not readily available to borrow at excessively low costs. That’s where the FED’s quarter century long loose monetary policy and below normal market interest rates played a complimentary role. Speculation results in excessive leveraging of ‘bad debt’. But leveraging requires easy, low cost borrowing. Deregulation allows leveraging to happen. But super low interest rates by the FED makes it possible in the first place. The two go hand in hand.

The repeal of the Depression-era Glass-Steagall Act in 1999 and its replacement with the Gramm-Bliley Act removed a major impediment, while providing a major impetus, to financial speculation and excess. But Bush took the opportunity several steps further. Bush’s contribution was to encourage and promote excessive financial speculation; turn over what remained of policing of the banking industry, in particular the investment banks, to the banks themselves; and send the remaining regulatory agency, the Security and Exchange Commission (SEC), to the sidelines. This policy thrust went on from the very beginning of his term in 2001 up to the outbreak of the financial crisis in late 2007. It is possible to cite numerous and repeated attempts by state and even federal mid-level officials who warned of the dangers of growing financial speculation, in general and with regard to subprimes in particular, from 2002 on. Regulators at both the state and federal levels repeatedly warned from late 2003 on what was going on in the mortgage markets in particular. So it is simply not true that Bush Administration regulators “did not see what was coming”.

In April 2004 the floodgates were further opened. At that time the SEC decided to allow the ‘big 5’ investment banks—i.e. the Lehman Brothers, Bear Stearns, Merrill, Morgan Stanley, Goldman Sachs—to take on unlimited debt and ‘leverage’ as they began their manipulation of the emerging boom in the subprime market. They were no longer required to keep virtually any reserves on hand for emergency situations. They could borrow without limit from the FED, hedge funds, and other private funds and leverage to the hilt, which they did. Bear Stearns, Lehman and the rest typically took on any and all bad debt and leveraged themselves to more than 30 times their available reserves. Moreover, they would be allowed to self-regulate themselves with no further SEC policing or oversight. Without this strong encouragement by the Administration, the excessive bad debt accumulation associated with the subprime market would not have been possible.

Thus the Securities and Exchange Commission did not simply ‘look the other way’. The agency responsible for regulation actively participated in and enabled the deregulation. It helped dismantle the last vestiges of regulation under Bush. Its chief Commissioner, Christopher Cox, was handpicked by Bush because he, Cox, had a long track record as a representative in the House raising and promoting legislation to protect the investment banking industry from lawsuits, loosening accounting rules for executive stock options, and cutting staffing and inspections at the SEC. Bush awarded him with the position.

It is also often forgotten that Secretary of Treasury, Paulson, the administration’s point man for financial system re-regulation, assumed his current role as Treasury Secretary in mid-2006, barely two years ago, and immediately launched as his first act in office a major effort to deregulate the banking industry still further. As the subprime crisis began to emerge in late 2006, Paulson was proposing and championing legislation for looser oversight by the SEC of banks and mortgage companies responsible for the subprime bust. His ‘mantra’ was to replace defined rules governing banks’ practices and behavior with vague, undefined ‘principles’. He originated a special commission to report proposals to do just that, which it did. As part of the report, while controls were further lifted on banks, more controls and restrictions were implemented, in contrast, on regulators. The target of the report were attorney generals and governors, like Eliot Spitzer, who were beginning to act and intervene because the SEC was content to do nothing and ignore the growing crescendo of warnings about the pending subprime crisis.

The same Paulson, ex-CEO of the investment bank, Goldman Sachs, and champion of deregulation under Bush from 2006 on, is now entrusted with financial re-regulation. It should therefore have been no surprise that his original ‘TARP’ proposal called for no new regulatory controls on the banks or limits on executive pay, as he simultaneously proposed to give Banks a handout of $700 billion.

Deregulation is directly related to corporate fraud. In Bush’s first term, scores of CEOs and senior managers were indicted and convicted for various forms of fraud. These companies were mostly associated with the technology sector, in the wake of the dot.com boom and bust. The current financial crisis has yet to produce its own crop of corrupt captains of industry. But it will. Investigations are already well underway by the FBI, SEC, and Congress. The new corruption cases will make the post-dot.com bust fraud revelations pale in comparison in terms of the dollar value rip-offs. Bush will therefore leave office with one of the worst legacies of corporate corruption on his watch.

It is important to note that Bush’s legacy on deregulation and its huge costs to the economy and US taxpayer was not limited to the finance industry. Space does not permit a chronicling of the devastating consequences of other industries’ deregulation under Bush: transport, communications, cross-industry occupational safety and health, environmental, federal labor and wage standards, food and drug safety, and countless other areas. In all cases, however, the result has been greater profits for corporations at the expense of consumers, workers and taxpayers.

Eighth Economic Legacy: The Destruction of Retirement

Another Bush legacy has been the destruction of the retirement system established in the immediate post-World War II period. That system was based upon the idea of a ‘three legged stool’ structure that included Social Security, employer-provided pensions, and personal savings. All three were actively undermined by Bush and have resulted in a crisis of historic proportions, for the more than 44 million retirees today and the 77 million baby boomers who will start joining their ranks starting next year.

The crisis in Social Security is not as described by the Bush administration a few years ago, as Bush desperately attempted to privatize the system. The crisis is the more than $2.3 trillion dollars that has been siphoned out of the Social Security Trust Fund the last two decades, transferred to the U.S. general budget, and spent in order to pay for wealthy and corporate tax cuts, chronic wars under Bush, and ballooning defense budgets. Social Security payroll tax collections for two decades have actually subsidized the U.S. budget, not undermined it. Every year the Social Security program produces a surplus, at the rate of sometimes hundreds of billions of dollars a year. And that surplus is diverted in full and spent. Defenders of the historic theft say ‘we owe it to ourselves’ and can put it all back in the trust fund whenever we need’. True. But to replace it requires the US Government borrowing back the $2.3 trillion from banks and other private sources, paying interest on that debt, and thus adding at least $200 billion more a year for ten years to the coming $1 trillion a year budget deficit. In accounting terms it is possible; in economic and political terms it is not. Bush has borrowed over his eight years in office more than $1.3 trillion of the $2.3 trillion Social Security Trust Fund surplus.

The second ‘leg of the stool’, private pensions, have fared even worse under Bush. When Bush took office there were more than 35,000 defined benefit pension plans, single and multi-employer, in the U.S. Today there are barely 30,000. More than 5,000 have disappeared. That decline has been with the active encouragement of the Bush administration. Throughout his first term and well into his second, Bush allowed underfunded pension plans to defer payments, required by law, into their pension funds to ensure they were solvent. He called these ‘contribution holidays’. In 2004-05 the practice was particularly abusive, in the run-up to the passage of what he called the ‘Pension Protection Guarantee Act of 2006’. That 2006 Act, however, was not designed to rescue defined benefit plans but to hasten their further demise—as witnessed by the collapse of 5000 more plans during his term. His legacy in this area is yet to worsen, moreover. Key elements of that Act permitted pension funds to invest in risky Hedge Funds. The latter are about to go bust in large numbers, resulting in a further crisis of traditional defined benefit pensions and their funds.

Bush consistently pushed the dismantling of defined pensions and their replacement with 401K plans. In fact, the 2006 Act has allowed companies to force-enroll employees in 401Ks. But 401Ks are virtually unregulated and studies show they yield far less in returns available for retirement than do traditional pensions. In fact, the average balance in 401ks today is barely $18,000. That means tens of millions face the future of retirement in the 21st century with only $18K of retirement sources, apart from social security benefits.

The final ‘leg’ of the retirement system stool has been broken as well under Bush. That was supposed to be the accumulation of one third of necessary retirement resources from personal savings. However, under Bush the personal savings rate has collapsed. Americans now have a negative savings rate, as they’ve struggled to barely keep up with the cost of living. Falling annual earnings do not produce savings. In an ominous recent trend, moreover, it appears many are having to borrow from their already insufficient 401ks just to cover medical cost and other expenses.

Bush’s legacy in the area of retirement is a crisis of historic dimensions in insufficient resources for tens of millions.

Ninth Economic Legacy: Dismantling the Postwar Health Care System

Bush has been even more successful in privatizing, and thus dismantling, the post-war health care financing system. By allowing health care insurance premiums and other costs to double during his term, rising more than 10% every year in his first seven years, he has forced employers and workers alike to give up health care coverage altogether or to reduce that coverage in order to afford rising premiums and other costs. There are now more than 47 million Americans without any kind of health coverage whatsoever, an increase of 9 millions since 2000. Eight out of ten of those uninsured are working Americans. More than 1.3 working Americans lost their health insurance coverage in 2006 alone. Approximately 12% of all kids in the U.S. have no health coverage. Despite this collapsing coverage, the U.S. spends nearly twice as much, about 17%, of its total GDP on health care. That compares with 9%-10% for those countries with single payer health delivery systems in Europe, Canada and elsewhere. It means the U.S. spends more than $1 trillion a year on middle men, i.e. mostly insurance companies, to push paper and forms around while delivering not a single health service.

For those still with health insurance, the rising cost burden has also shifted significantly from employers to their workers—by as much as 30% according to some studies—to cover rising costs of not only monthly premiums but out of pocket deductibles and copayments. Thousands of companies have been allowed to abandon their health plans altogether, most notably in recent years the big auto companies which are in the process of dumping their health care funds, underfunded by $50 billion, onto the auto workers’ unions. Employers that once provided medical benefits for their retirees under their plans, benefits often negotiated with their unions, have simply arbitrarily and unilaterally discontinued those benefits. The administration and the courts have encouraged and endorsed such employer and court decisions.

Bush’s long run plan has always been to fully privatize health care, just as it has been to complete the privatization of defined benefit pensions and has attempted to privatize social security. Bush’s creation of so-called Health Savings Accounts, or HSAs, has been the center of the administration’s health care insurance strategy. HSAs are simply the analog of 401ks. Like the latter, they are designed to eliminate and replace group plans provided by employers or negotiated by unions. Bush and employers have as their goal the elimination of any central role by employers providing either retirement or health care coverage. That is what Bush has called his ‘Consumer Driven Society’. That too is his legacy—a health care delivery and financing system that is now as broken as the retirement system.

Tenth Economic Legacy: Massive Tax and Income Shift to the Wealthy

Every year for the first five years of his terms in office Bush pushed historic tax cuts totaling more than $5 trillion. Estimations from sources like Brookings, Urban Institute, and others are that about 73% of the cuts benefited the wealthiest 20% households. 30%, or $1.5 trillion, of that 73% benefited the wealthiest 1% households, or roughly 1.1 million out of the total 114 million taxpaying households in the U.S. But these figures don’t even include tax cuts for corporations, which have amounted to trillions more under Bush. Nor do they include similar massive tax shifting at the State and Local government levels. Where has all that tax cut money gone, one might ask? A good deal of it into Hedge Funds, Private Equity Funds, and other forms of private, unregulated banking—and thus stoking the fires of speculative investment in recent years in subprimes, derivatives and other unregulated financial securities. Other amounts have no doubt contributed to the explosion of offshore tax shelters. According to the investment bank, Morgan Stanley, in 2005 offshore tax shelters had increased their funds from only $250 billion in 1983 to more than $5 trillion by 2004. More recent estimations by the Tax Justice Network indicate tax shelters now hold more than $11 trillion. A reasonable estimate is that wealthy Americans likely account for at least 40% of that total, or around $4-$4.5 trillion. Exactly how much is not currently knowable, since there are around 27 offshore tax shelters, according to the IRS, in mostly sovereign nations like the Cayman Islands, the Seyschells, Isle of Man, Vanuatu and the like which have closed their tax doors and do not cooperate with IRS attempts to investigate how much wealthy US taxpayers have stuffed away in their electronic vaults.

The massive tax shift has been a prime cause of the Bush legacy of shifting relative income and wealth in the U.S. during his term—from roughly 91 million middle and working class taxpaying households to the wealthiest 1% (1.1 million) of U.S. households. There are of course numerous additional means by which income has been shifted from the bottom 80% to the wealthiest 1% (e.g. executive pay), but the tax system restructuring under Bush has likely been the most contributive sources.

An idea of how much this has all resulted in the explosion of income and wealth gains at the top at the expense of those at the bottom 80% has been estimated in recent academic studies by professors Emmanual Saez and Thomas Picketty. Based on their deep analysis of IRS taxes paid over the history of the Federal Income Tax since 1917, the wealthiest 1% of households in the U.S. received about 8.3% of total income in the U.S. in 1978. By 2006, however, that wealthiest 1% were receiving 20.3% of total income generated in the U.S. And that still does not include tax sheltered income. Nor does it include corporations’ retained income or profits diverted offshore to avoid taxes. But the 20.3% does represent a return to almost exactly what the top 1% received in 1928—i.e. 21.09%–on the eve of the last Great Depression!

For the Bush years, that 20.3% translates into incomes of the top 1% growing in real terms at a rate of 11% per year between 2002-2006. In contrast, the remaining 99% of taxpaying households in the U.S. grew in real terms at an annual rate of only 0.9%. It also means that top1% captured about 75% of all the incremental net income gains during the years 2002-06 under Bush. (1)

Two Final Comments

Bush’s ‘Toxic Economic Legacies’ have their roots in policies that are not uniquely his own. The above ten points represent policies that commenced in earnest in the 1980s under Reagan, and in some instances even before that during the last two years of the Jimmy Carter administration. The policies were continued in various form through the administrations of George Bush senior and Bill Clinton with different emphases. What characterizes the administration of George W. Bush is that the toxic legacies were carried to the extreme, accelerated in terms of their effects, as well as their inevitable negative consequences. Whether income shift, financial deregulation and crisis, tax shift, budget deficits and fiscal crisis, the destruction of the retirement and health care systems, etc., Bush represents the continuation of the policies and legacies on an accelerated rate, on a magnified scale—i.e. ‘a toxicity writ large’.

A second, final comment is that these toxic economic legacies are interdependent, one feeding upon and exacerbating the other. It is not possible, for one example, to understand the current financial crisis and emerging global epic recession apart from the massive shift and concentration of income in the hands of the wealthiest household-speculators and corporate-speculators. That is not the sole explanation of the present systemic financial collapse or growing threat of global depression increasing now almost daily. But the financial and economic crisis underway at present cannot be fully comprehended apart from the former either. Reversing the legacies, removing the toxic effects on the future of American economy and society cannot take place without correcting the fundamental causes. And that includes reversing once again, as in the 1930s and 1940s, the perverse and distorted income and wealth distribution afflicting society itself.

Dr. Jack Rasmus

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