Geithner’s Hog Wallow

The banks have zeroed in on Geithner’s cash giveaway bonanza, the “Public Private Investment Partnership” (PPIP) for their next big sting. As expected, Bank of America and Citigroup have angled their way to the front of the herd, thrusting their pig-heads into the public trough and extracting whatever morsels they can find amid a din of gurgling and sucking sounds. Here’s the story from the New York Post:

As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post . . .

But the banks’ purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.

One Wall Street trader told The Post that what’s been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.

Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids. (“Double Dippers; Citi and B of A buy laundered loans at lower rates,” Mark DeCambre, New York Post

Thus begins the next taxpayer-subsidized feeding frenzy featuring all the usual suspects. The race is on to vacuum up as much toxic mortgage paper as possible so it can be dumped on Uncle Sam at a hefty profit. Nice. These are the same miscreants the Obama administration is so dead-set on rescuing. It’s crazy to help people who use the cover of a financial crisis to fatten their own bottom line. Let them sink and be done with it.

How is it that industry rep Geithner couldn’t see that his latest round of corporate welfare would create incentives for the bank scoundrels to game the system again? Naturally, if the government goes into the business of buying crap loans from teetering financial institutions, the speculators and snake oil salesmen will follow. And so they have. Citi and B of A are just the first to respond to Geithner’s pigwhistle. Next will be the hedgies and the Private Equity porkers, all nuzzling up to the Treasury’s burgeoning feed bin hoping to sink their teeth into whatever tasty nuggets bob to the top of the trough.

OINK

Geithner’s plan is a disaster from the get-go. It jacks up the price of garbage assets, rewards the misallocation of capital, invites rampant fraud, and prolongs the recession. Worst of all, it transforms the FDIC into a hedge fund putting individual bank deposits at greater risk. Economist Jeffrey Sachs sums up Geithner’s “public-private” boondoggle in his article “Will Geithner and Summers succeed in raiding the FDIC and Fed?”:

Geithner and Summers have now announced their plan to raid the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve (Fed) to subsidize investors to buy toxic assets from the banks at inflated prices. If carried out, the result will be a massive transfer of wealth — of perhaps hundreds of billions of dollars — to bank shareholders from the taxpayers (who will absorb losses at the FDIC and Fed) . . .

The FDIC is lending money at a low interest rate and on a non-recourse basis even though the FDIC is likely to experience a massive default on its loans to the investment funds . . . . In essence, the FDIC is transferring hundreds of billions of dollars of taxpayer wealth to the banks…The public will not accept overpaying for the toxic assets at taxpayers’ expense. Thus, it is very likely that the Administration will attempt to avoid Congressional oversight of the plan, and to count on confusion and the evident “good news” of soaring stock market prices to justify their actions . . . .

Other parts of the plan support subsidized loans from the Treasury and, even more, from the Fed. The Fed is already buying up hundreds of billions of dollars of toxic assets with little if any oversight or offsetting appropriations. Since the Federal Reserve profits and losses eventually show up on the budget, the Fed’s purchases of toxic assets also should fall under the Federal Credit Reform Act and should be explicitly budgeted. (“Will Geithner and Summers succeed in raiding the FDIC and Fed?,” Jeffrey Sachs, Huffington Post)

As Sachs points out, the Fed’s liabilities will eventually be shifted onto the taxpayer. But that hasn’t stopped Bernanke from writing checks on an account that is overdrawn by $11 trillion. Nor has it compelled Geithner to seek congressional authorization before he leverages the FDIC up to its eyeballs. These decisions are all being made by a small coterie of bank loyalists who operate independent of any oversight or government supervision. They do what’s best for their constituents and let the chips fall where they may.

Earlier this week, Geithner asked Congress for additional powers to take over insolvent non-bank financial institutions. According to the Washington Post:

“The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.”

Geithner must think he’s a shoe in for the new “systemic regulator” post because of the exemplary way he handled the AIG bonus scandal.

Of course, in the bizarro world of Washington — where failure typically catapults one to higher office — it’s only logical that Geithner would be elevated to Uber-Regulator, not only controlling the public purse, but using his own peerless grasp of the marketplace to decide which institutions pose a systemic risk and need to be sidelined, and which need stepped-up government support via limitless capital injections. (a.k.a. “Freebies”)

Prediction: If Geithner is granted these special powers by the brain dead Congress, the country will undergo the greatest period of bank consolidation in its 230 year history. This is a blatant power grab by a shifty character that has risen to his present pay grade by nosing his way up the political stepladder. Congress had better get its act together and put an end to this nonsense or the nation will continue its fast-paced metamorphosis into a feudal oligarchy run by the Bank Mafia and Wall Street racketeers. The first step is to give Geithner, Summers and any other of the Rubin-clones a full-body bacon rub followed by a few brisk dunks in the shark tank. Then, hose down Treasury and bring in a whole new team.

Nobel Prize winning economist Joseph Stiglitz summed up Geithner’s “public-private” fiasco like this:

“Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

Geithner’s gotta go. Pronto.

Mike Whitney lives in Washington state. He can be reached at: fergiewhitney@msn.com. Read other articles by Mike.

25 comments on this article so far ...

Comments RSS feed

  1. Brian said on March 31st, 2009 at 3:47pm #

    Convincing.

  2. Jeff said on March 31st, 2009 at 6:28pm #

    Like always, the long time owners of the “fed” play both sides. The owners of the “fed”, all “feds” worldwide, play to win. When you own the deck of cards, well you are all intelligent to finish the statement. Or are you?

  3. Tennessee-Chavizta said on March 31st, 2009 at 8:59pm #

    A US AMBASSADOR WRITES ABOUT ASSASINATION THREATS AGAINST HIM BY ISRAELI MOSSAD AGENTS !!

    http://www.thenation.com/doc/20090413/crossette/print?rel=nofollow

    By Barbara Crossette

    March 31, 2009

    In the wake of the accusation by Chas Freeman that his nomination to lead the National Intelligence Council was derailed by an “Israeli lobby,” a forthcoming memoir by another distinguished ambassador adds stunning new charges to the debate. The ambassador, John Gunther Dean, writes that over the years he not only came under pressure from pro-Israeli groups and officials in Washington but also was the target of an Israeli-inspired assassination attempt in 1980 in Lebanon, where he had opened links to the Palestine Liberation Organization.

    Share this article

    Related
    Also By
    ‘Tell Her the Truth’ Israeli/Palestinian Conflict

    Tony Kushner & Alisa Solomon: On Caryl Churchill’s Seven Jewish Children: A Play for Gaza.
    After Gaza: Jerusalem? Israel

    Helena Cobban: Reclaiming Palestinian territory in East Jerusalem looks to be new frontier for Israeli expansionism.
    » More
    US Envoy Writes of Israeli Threats Israel

    Barbara Crossette: In a forthcoming memoir, John Gunther Dean writes about not only pressure from pro-Israeli officials in Washington but attempts on his life for reaching out to the Palestinians.
    Pakistan in Turmoil Pakistan

    Barbara Crossette: Pakistan’s Chief Justice is restored after protests rock Lahore, but questions remain about the stability of President Asif Ali Zardari–and new challenges for the Obama administration.
    Lakhdar Brahimi: Afghanistan’s Future Afghanistan

    Barbara Crossette: In an interview with The Nation, a veteran UN envoy assesses the Obama administration’s evolving policies on Afghanistan and the role President Hamid Karzai might play.

    Dean’s suspicions that Israeli agents may have also been involved in the mysterious plane crash in 1988 that killed Pakistan’s president, General Mohammed Zia ul Haq, led finally to a decision in Washington to declare him mentally unfit, which forced his resignation from the foreign service after a thirty-year career. After he left public service, he was rehabilitated by the State Department, given a distinguished service medal and eventually encouraged to write his memoirs. Now 82, Dean sees the subsequent positive attention he has received as proof that the insanity charge (he calls it Stalinist) was phony, a supposition later confirmed by a former head of the department’s medical service.

    Dean, whose memoir is titled Danger Zones: A Diplomat’s Fight for America’s Interests, was American ambassador in Lebanon in August 1980 when a three-car convoy carrying him and his family was attacked near Beirut.

    “I was the target of an assassination attempt by terrorists using automatic rifles and antitank weapons that had been made in the United States and shipped to Israel,” he wrote. “Weapons financed and given by the United States to Israel were used in an attempt to kill an American diplomat!” After the event, conspiracy theories abounded in the Middle East about who could have planned the attack, and why. Lebanon was a dangerously factionalized country.

    The State Department investigated, Dean said, but he was never told what the conclusion was. He wrote that he “worked the telephone for three weeks” and met only official silence in Washington. By then Dean had learned from weapons experts in the United States and Lebanon that the guns and ammunition used in the attack had been given by Israelis to a Christian militia allied with them.

    “I know as surely as I know anything that Mossad, the Israeli intelligence agency, was somehow involved in the attack,” Dean wrote, describing how he had been under sharp criticism from Israeli politicians and media for his contacts with Palestinians. “Undoubtedly using a proxy, our ally Israel had tried to kill me.”

    Dean’s memoir, to be published in May for the Association for Diplomatic Studies and Training Memoir Series by New Academia Publishing under its Vellum imprint, has been read and approved for publication by the State Department with only very minor changes, none affecting Dean’s major points. Its underlying theme is that American diplomacy should be pursued in American interests, not those of another country, however friendly. A Jew whose family fled the Holocaust, Dean resented what he saw as an assumption, including by some in Congress, that he would promote Israel’s interests in his ambassadorial work.

    Dean, a fluent French speaker who began his long diplomatic career opening American missions in newly independent West African nations in the early 1960s, served later in Vietnam (where he described himself as a “loyal dissenter”) and was ambassador in Cambodia (where he carried out the American flag as the Khmer Rouge advanced), Denmark, Lebanon, Thailand (where Chas Freeman was his deputy) and India. He takes credit for averting bloodshed in Laos in the 1970s by negotiating a coalition government shared by communist and noncommunist parties.

    He was sometimes a disputatious diplomat not afraid to contradict superiors, and he often took–and still holds–contrarian views. He always believed, for example, that the United States should have attempted to negotiate with the Khmer Rouge rather than let the country be overrun by their brutal horror.

    As ambassador in India in the 1980s he supported then-Prime Minister Rajiv Gandhi’s policy of seeking some kind of neutral coalition in Afghanistan that would keep the American- and Pakistani-armed mujahedeen from establishing a fundamentalist Islamic state. For several years after the Soviet withdrawal, India continued to back Najibullah, a thuggish communist security chief whom the retreating Soviet troops left behind. After the mujahedeen moved toward Kabul, Najibullah refused a United Nations offer of safe passage to India. He was slaughtered and left hanging on a lamppost.

    It was in the midst of this Soviet endgame in Afghanistan that Dean fell afoul of the State Department for the last time. After the death of General Zia in August 1988, in a plane crash that also killed the American ambassador in Pakistan, Arnold Raphel, Dean was told in New Delhi by high-ranking officials that Mossad was a possible instigator of the accident, in which the plane’s pilot and co-pilot were apparently disabled or otherwise lost control. There was also some suspicion that elements of India’s Research and Analysis Wing, its equivalent of the CIA, may have played a part. India and Israel were alarmed by Pakistan’s work on a nuclear weapon–the “Islamic bomb.”

    Dean was so concerned about these reports, and the attempt by the State Department to block a full FBI investigation of the crash in Pakistan, that he decided to return to Washington for direct consultations. Instead of the meetings he was promised, he was told his service in India was over. He was sent into virtual house arrest in Switzerland at a home belonging to the family of his French wife, Martine Duphenieux. Six weeks later, he was allowed to return to New Delhi to pack his belongings and return to Washington, where he resigned.

    Suddenly his health record was cleared and his security clearance restored. He was presented with the Distinguished Service Award and received a warm letter of praise from Secretary of State George Shultz. “Years later,” he wrote in his memoir, “I learned who had ordered the bogus diagnosis of mental incapacity against me. It was the same man who had so effusively praised me once I was gone–George Shultz.”

    Asked in a telephone conversation last week from his home in Paris why Shultz had done this to him, Dean would say only, “He was forced to.”

    Get The Nation at home (and online!) for 68 cents a week!
    If you like this article, consider making a donation to The Nation.
    About Barbara Crossette
    Barbara Crossette, United Nations correspondent for The Nation, is a former New York Times correspondent and bureau chief in Asia and at the UN.

    She is the author of So Close to Heaven: The Vanishing Buddhist Kingdoms of the Himalayas, published by Alfred A. Knopf in 1995 and in paperback by Random House/Vintage Destinations in 1996, and a collection of travel essays about colonial resort towns that are still attracting visitors more than a century after their creation, The Great Hill Stations of Asia, published by Westview Press in 1998 and in paperback by Basic Books in 1999. In 2000, she wrote a survey of India and Indian-American relations, India: Old Civilization in a New World, for the Foreign Policy Association in New York. She is also the author of India Facing the 21st Century, published by Indiana University Press in 1993.

  4. Deadbeat said on April 1st, 2009 at 12:42am #

    The problem is Capitalism. It doesn’t matter whether it’s Geithner or Summers or Obama etc.

  5. Eric said on April 1st, 2009 at 6:04am #

    I would like to make the observation that Obama’s defacto take over of GM represents the classic definiton of facism; the marriage of government with business.

    Its dead wrong for Obama to force GM to merge wth a foreign company.
    I can see U.S. manufacturing technology walking out the door.

    Its more important to lend money to the auto makers to maintain a manufacturing capacity in the U.S., than it is to give trillions to speculators on Wall St. A manufacturing capacity can make other things beside cars. Speculation breeds only greed.

    Clearly Obama is nothing more than a front man for Wall St.

    Eric

  6. Max Shields said on April 1st, 2009 at 7:20am #

    Deadbeat, so should we bring the military home from the 800 bases and the 3 war fronts and have them bomb Capitalism?

    I would like to meet this fellow, Capitalism, I’d give him/her a piece of my mind!

    When we’re done we’ll bring the fellow, Zionism to the table and beat the living hell out of that sonofabitch.

    I agree, Obama is not the problem. He’ll be ok once we get Capitalism out of the way and it’s twin, Zionism.

  7. Max Shields said on April 1st, 2009 at 7:50am #

    Let me sharpen the point. It is not merely Capitalism which is the issue. It is the globalization of capitalism and the uneconomics of endless growth and consumerism and associated debt which are the crux of the problem. Together with the virtual elimination of a real economy as opposed to one based on the financing of capital (and the high rolling speculation involved), this is a preditory viral economics supported by the world’s largest military industrial complex. This is not simply “capitalism” though capitalism is woven in it.

    Obama and his cabinet/advisors are advocates of the global economy and the consumer-based dimensions that have brought us to this place.

    In that sense they are feeding the preditory monster (ala trillion dollar “bailout”). President Obama is part of the problem, not a solution. This is a human problem of power, not of an “ism” per se.

  8. bozh said on April 1st, 2009 at 12:09pm #

    max, you are right,
    nothing exist in isolation; each ism is related to everything else; zionism/aipac included.
    israeli lobby and its influence in US governance exists because it is compatible with US governance.
    change the structure of governance to a more or much more democratic governance and any group’s influence nearly vanishes.

    but first we must educate amers and many other folks, that in US governance, vast majority of people have near zero politico-military powers.
    and if we wld obtain an understanding of the situation by 90% of powerless people, change is possible.
    i think that this analyses show/prove that O’s change is a merciless lie.
    i tell you, if i was in his shoes, and i said that, i wld have dozens and dozens anxiety attacks. tnx

  9. Deadbeat said on April 1st, 2009 at 12:33pm #

    Let me sharpen the point. It is not merely Capitalism which is the issue. It is the globalization of capitalism and the uneconomics of endless growth and consumerism and associated debt which are the crux of the problem.

    Capitalism has been a globalized system for CENTURIES. The slave trade was clearly a globalized system and the pillaging of the global south helped to build the wealth of Europe and the United States. “Consumerism” as you phrase it was how the U.S. dealt with the stagnation of worker wages starting from the mid 1970′s and it at the heart of the current financial crisis. Technology advances help the ruling class extract productivity gains from workers and the surplus value (profits) being extracted from workers was lent back — at interest– through the banks.

    At the heart of Capitalism is the notion of endless “growth” but most importantly the maldistribution and control of wealth. Or phrased another way increasing exploitation of the working class.

    Max Shields and to a lesser extent bozh would have reader believe that what is currently going on is something more “complex” or pretend they have uncovered a new concept. There is nothing new here nor is there a need to redefine the language. Doing such is primarily an agenda to sow confusion and obscurity. This has been one of the main reason why the Left is in such a sorry state. Sowing confusion in the Chomskyesque fashion retards solidarity.

    I suggest Max and bozh, since they reject Marx, read the remarks from Lula da Silva, the President of Brazil about the current global crisis.

    Here’s an article from CounterPunch that provide some background on the racial divide and how Capitalism help to create this divide. Apparently since Max seems to forget about the global slave trade in the development of GLOBAL Capitalism he should refresh his memory before he submits his “opinion”.

  10. Max Shields said on April 1st, 2009 at 1:06pm #

    DB, here is where your argument displays its fundamental flaw. That is: what is Capitalism? If it is based on the work of Adam Smith, than one can clearly mark it as around 1776 and slavery and slave trade of all sorts existed thousands of years before that.

    I am not arguing a new “concept” but the fundamentals of problem identification premised on a holistic systemic view of the world. This approach separates out ideology and allows for clarity. Human nature, human behavior is at the basis of all of this; as is the nature of life itself.

    To isolate everything into a simplistic ideology or ism is to miss the core of the problem and to simply offer a flawed (at best) solution).

    I don’t reject “Marx”. How could anyone “reject” his many volumes and millions upon millions of words and thousands of ideas without contradicting oneself. Certainly there are truisms in Marx as there are in Smith or David Ricardo; that does not mean a blind adherence to Marx frequently opaque ideas along with clear brilliant analysis is a path one should follow. Sorry if this is just too complex, DB. I say one should neither accept nor reject Marx or Smith in their entirety.

    To your point about capitalism and maldistribution, I can only say, that students of Wealth of Nations and The Theory of Moral Sentiments, both by Smith, would differ with you regarding Adams’ rather complex views on human nature and morality.

    But since you choose to talk about Marx the man, and not Adam Smith the man, it would appear that you think Capitalism is simply an evil devised by the devil, while flesh and blood Marx offers a more pure form of life. This is a specious argument, Deadbeat.

    A real argument would address the root causes, regardless of where the chips fall, and attempt to understand how these have been exaserbated with what is clearly the most massive military might of the world has ever witnessed or felt…the USA.

    Btw, I suspect after following bozh’s posts for months, that he is in agreement with the above (though he might state it differently).

  11. bozh said on April 1st, 2009 at 1:31pm #

    deadbeat, sorry,
    i do not reject marx. i have never read any of his writings.

    and please don’t put your word ” complex” in my mouth; in fact, i said that no ism stands in total isolation from any other ism or issue. the idea is simple, and as you have said, it’s been around [ ?for at least 70-80 yrs].
    so i do not pretend that i am doscoverer of this notion. in at least one or two posts i have asserted that much of what i know i’ve learned from others.
    and i also expect to find out that all ideas i have thus expressed, have been stated for the last few millennia. but thanx for your comment.

  12. bozh said on April 1st, 2009 at 1:45pm #

    max, i say yes,
    as a wise person said, Let us not leave a stone unturned when searching for knowledge.
    i accept deadbeat’s assertion that aipac influences US foreign policy. but the question to me is to what degree? has it ever acted as gov’t above the elected gov’t?
    and if a major decision of the elected US gov’t had indeed been countermanded or delayed and waiting for aipac’s approval, wld that not be recorded?
    but wldn’t that amount to a coup d’etat? meaning that army and cia wld be complicit in this putsch or wldn’t know about it.
    so who is running what or whom? is US an israeli U’stan? tnx

  13. Max Shields said on April 1st, 2009 at 2:18pm #

    bozh “aipac influences US foreign policy. but the question to me is to what degree? has it ever acted as gov’t above the elected gov’t?”

    Well said. I think AIPAC is like any powerful special interest (insurance, pharma, etc) who has tremendous influence through it’s lobbying capacity and capacity to make like “difficult” for elected officials in some areas of the country. As such the problem is not one of AIPAC, but one of how our system has been corrupted by the power of a few, and the money that provides that access and influence.

  14. Garrett said on April 1st, 2009 at 2:23pm #

    Max,

    If human nature or human behavior is the problem, is there a solution/cure?

  15. Max Shields said on April 1st, 2009 at 4:33pm #

    The point is ideologies, economic systems, cultures, and polity are all human inventions. They are conceived by/for someone or group.

    I think we can solve problems once we understand them. I also think that life is not static, nor is the human condition. It emerges. We collectively create our reality through our narratives.

    But, to my earlier point, Obama (whether we think he is in a box because of his position or whatever) behaves and acts on the world according to his view of what “must be done” given” the narrative he has embraced. What he may or may not really want to do is irrelevant becauses he is reinforcing the dominant narrative.

    If we are on a collision course do to energy and general resource depletion and pollution, and our economics contributes to that demise and creates a world which is less and less inhabitable, and our wars further contribute to this downward spiraling, this irreconcilable limit”, then we are faced with a dilemma.

    The human species tends toward unsustainable actions. Other creatures do as well, but humans require much more from the environment than do others. Our economics are a perfect barometer of this behavior. The economy grows through exhausting resources, then it collapses and constricts. Once the contrication is stablized – reduction in population, in general consumption and energy usage – there is a tendency to return, “gradually”, to the prior state. The Great Depression was a collapse that recalibrated the economy, adusting it, but almost as soon as that adjustment was made, the baby boom happened, fossile usage increased geometrically, and then expotentially, and we created a world that was a deadend. It’s been called the long emergency; and we’re heading toward the bottom.

    I don’t think a little Marxism is going to cure this. I don’t think more of the same – ala bailouts – will do anything but fastforward the collapse.

    The “solution” is recognizing the problem for what it is, and begin to transform and restructure around an economics of steady-state (a balance between inputs/outputs), one that values community and life’s simple pleasures (which are infinite). A collapse, I think, is essential to getting us there, but “we” must be ready with alternatives. A smaller, scaled down, steady state existence aligned with the environment is an alternative not based on ideology or blueprint.

    War and conflict is caused primarily through the desire to grow, and consume resources. Empires are born out of expansive energy use (hence our expotential demand for fossile). Knowing this, we can reduce and avoid most conflict.

  16. Garrett said on April 1st, 2009 at 4:44pm #

    Max wrote, “The point is ideologies, economic systems, cultures, and polity are all human inventions. They are conceived by/for someone or group.”

    I understand and agree with the point you were/are making.

    Max went on to write, “The “solution” is recognizing the problem for what it is, and begin to transform and restructure around an economics of steady-state (a balance between inputs/outputs), one that values community and life’s simple pleasures (which are infinite). A collapse, I think, is essential to getting us there, but “we” must be ready with alternatives. A smaller, scaled down, steady state existence aligned with the environment is an alternative not based on ideology or blueprint.”

    How will we know when this collapse has taken place? In other words, how would you define “collapse?” Once it occurs, how do “we” establish what you call a ‘steady-state’?

    For the record, I’m more or less in agreement with you. But I’m left with a lot of questions.

  17. Max Shields said on April 1st, 2009 at 5:57pm #

    Garrett,

    Let’s tread humbly here. Historically, when a collapse occurs, whether a civilization (or empire) or ecologically, there is not always some definitive demarcation. Today we see a significant economic contraction. But this contraction, while real, is based on excessive speculation. The US economy seems to exist as a result of its deep connections with the world’s economy. It’s as if it is being buoyed by these intersections while at the same time there is this tectonic shifting going on. Contraction has the effect of short-term stablization, but when met with a full steam ahead reaction (which is what is taking place now), there is a massive attempt to keep running on empty.

    The global economy has created a fragile web of interdependencies which are unstable. The US economy (its engine) has evaporated, replaced by complex financial speculative services and consumption all propagated by debt. Precarious “accident” waiting to happen.

    It seems the key is energy. The USA needs fuel as do the advanced developing and industrialized areas. So far, with all the bowing to technology, nothing really replaces what got us here: fossil in the form of oil, coal, and natural gas. Wind and solar cannot replace these fuels given what “we’ve” created. The demand is insatiable, constant and growing, and has grown expotentially since the early 1970s. As this peaks, there will be no comparable replacements; the contraction will be massive because there is NO economy, no civilization without energy. Food is the main energy source for life, but humans are incapable of doing much without magnifying their energy through – FOSSILE conversion.

    A steady state economy (the true term for a sustainable economy) would simply replace every barrel of oil (or other energy non- source) with an equivelent renewable energy source. Since, fossile does not have a “one for one” alternative, human civilization will contract significantly until it reaches a stasis. If it occurs in an intentional transformational way, life, though the adjustment will be difficult, will not be intolerable. If we continue to push on the excellerator with “bailouts” and hypergrowth and continued globalization and war, the pain has been predicted to be very sever for most people.

    This does not answer the question when do we “know” the collapse has occurred. It’s like a fish at the end of a line – you just know.

    But we have choices. Obama has chosen, on a national scale, to keep the “trains” moving, full steam ahead on the empire train, while he plays with “green this and that”. But the solution is much more profound and deeper than political appeasement to a “left” base. This collapse will take us beyond business as usual politics.

    I didn’t and don’t think we have national leadership to make this a “soft” landing. Something could change this, but it appears unlikely. Conclusion, prepare, locally, prepare NOW.

  18. Garrett said on April 1st, 2009 at 7:22pm #

    So, if I decide to quit my current job and work for a nonprofit, I wouldn’t be wasting my time?

    Seriously, it’s something I’m considering.

  19. springbaby said on April 1st, 2009 at 7:41pm #

    Chances are that you would be working for the government. Many nonprofits receive their funding through government grants. Many are funded privately and through foundations, however, the recession and Obama’s tax on charitable contributions makes the pie much smaller.

  20. Garrett said on April 1st, 2009 at 8:42pm #

    By the way, how can the economy be growing and contracting at the same time? Please explain. I admit to not having as strong a grasp of economic issues as you and others who post on this site.

  21. Deadbeat said on April 1st, 2009 at 9:59pm #

    DB, here is where your argument displays its fundamental flaw. That is: what is Capitalism? If it is based on the work of Adam Smith, than one can clearly mark it as around 1776 and slavery and slave trade of all sorts existed thousands of years before that.

    WRONG! The nature of slavery was tremedously altered and in fact DEGRADED by capitalism. The slave trade WAS a feature of Capitalism. I refer you to Lorone Bennett Before the Mayflower: A History of Black America. No Max the Slave Trade was UNIQUELY Capitalist and it created the wealth among capitalist that still exist today.

    You mockingly stated in a prior response….

    Deadbeat, so should we bring the military home from the 800 bases and the 3 war fronts and have them bomb Capitalism? I would like to meet this fellow, Capitalism, I’d give him/her a piece of my mind! When we’re done we’ll bring the fellow, Zionism to the table and beat the living hell out of that sonofabitch.

    The problem with your response Max is that you fail to see how RACISM and CAPITALISM are very much intertwined. And Zionism is only yet another form of RACISM. It a pity Max that you are using your talents to really sow confusion and obfuscation but that is what is the most severe problem with the Left today and why solidarity is so pathetically retarded.

    It seems as though you would rather reinvent the wheel rather than rediscover Marx’s critique of Capitalism and consistency of crisis that occur in the system. But the real source of your argument is that the REAL problem is NOT systemic; not inequality; no the imbalance of power but HUMAN …

    The human species tends toward unsustainable actions. … humans require much more from the environment than do others. Our economics are a perfect barometer of this behavior. The economy grows through exhausting resources, then it collapses and constricts. Once the contrication is stablized – reduction in population, in general consumption and energy usage – there is a tendency to return, “gradually”, to the prior state. The Great Depression was a collapse that recalibrated the economy, adusting it, but almost as soon as that adjustment was made, the baby boom happened, fossile usage increased geometrically, and then expotentially, and we created a world that was a deadend. It’s been called the long emergency; and we’re heading toward the bottom.

    You analsyis is way off base and I regret that there will be people here reading your crap and taking it in as rational and reasonable. What you failed to mention is that Capitalism didn’t END after WWII (when the baby boom occurred) you provide no analysis of Liberalism and the Second Red Scare that decimated the Left in the United States. In fact Max you are WRONG about growth.

    The crisis that is occuring right now is the direct response by Capitalist to the DECLINE in the rate of growth. The Capitalist response was to EXTRACT MORE wealth from workers by lowering their standard of living via stagnating wages. In order for the working class to maintain their living standards their BORROWED the money. So you have a working class being robbed of their surplus value only to have to borrow it back at interest. This is what has provided the capital to the financial industry for them to create bubbles. This was true in Marx era as it is true today. Liberalism (meaning regulations) only delayed this crisis by 60 years but naturally the ruling elites couldn’t leave well enough alone.

    Therefore the problem is not human beings. The problem is one of POWER and the power relationship of exploitation.

    What makes human different Max is that they can THINK and be educated the problem is that humans can also be diverted and indoctrinted as well. As we can see Max there are HUMANS right now challenging these arrangements such as what is happening in Latin America. The problem is that it is not happening in the United States. The American people have for nearly 150 years expected raising living standards but Capitalism severed that in the mid 1970′s and folks accustomed to striving for the American Dream are now begining to realize it was a facade. The real question is what solution will the American people seek.

    This is a time where I think many Americans are looks for solutions. I hope they find real solutions and not the obscure ideas you seem to offer up.

  22. Max Shields said on April 2nd, 2009 at 1:15am #

    Garrett???????

  23. Max Shields said on April 2nd, 2009 at 5:54am #

    DB if you don’t understand what I”ve posted, please ask questions instead of making outlandish remarks.

    I’m NOT saying there are not systemic problems. In fact, I made it quite clear that a systemic view is essential to help see the problem(s) and rid them of the baggage of ideology. You seem to want to put these problems in the same old tired isms and make racism part of the problem.

    But we can’t divorce the system from the players who use it.

    Racism is a symptom of the problem of domination. Domination occurs when one entity attemps to conquer (primarily for resources) another. Racism, like Zionism, are labels applied to variations on that symptomatic theme.

    Now maybe that’s too much for you. Maybe you would prefer to throw around Marx. The you never deal with what I’ve raised against the extreme weakness of your “argument”. Instead you wait for me to post again responding to someone else so you can “quote” and distort, which is a tactic your regularly use here.

    Deadbeat you have NO argument that is defensible. You simply fish around for tidbits and in a very reactionary fashion, use it to try to make a point.

  24. Max Shields said on April 2nd, 2009 at 7:23am #

    David Harvey was on DN. I think he touches on a number of salient points regarding the economic state. Regardless of whatever work he’s done regarding Marxism, he is no ideologue.
    http://www.democracynow.org/2009/4/2/marxist_geographer_david_harvey_on_the

  25. Max Shields said on April 2nd, 2009 at 7:24am #

    Point, I think we need people who think outside of ideologies, see the problem for what it is and don’t simply shovel in the old Marxist solutions as if it’s a plug-and-play game here. It seems Harvey represents that kind of broad thinking.