Begin forwarded message:
From: [EMAIL PROTECTED]
Date: July 22, 2008 11:19:29 PM PDT
To: [EMAIL PROTECTED]
Cc: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED]
Subject: Is Capitalism Committing Suicide, or Is It Being Murdered
by "Conservatives"?
11 reasons America's a new socialist economy
How free market ideology backfired, sabotaging capitalistic democracy
By Paul B. Farrell, MarketWatch
Last update: 11:47 a.m. EDT July 22, 2008
http://www.marketwatch.com/news/story/eleven-reasons-america-new-top/story.aspx?guid=
{D23E1901-728E-4A3C-99D1-7E80F74C3AE3}&dist=TNMostRead
ARROYO GRANDE, Calif. (MarketWatch) -- Welcome to the conservative's
worst nightmare: The law of unintended consequences. Why? Nobody
wants to admit it, folks, but the conservatives' grand ideology is
backfiring, actually turning the world's greatest capitalistic
democracy into the world's newest socialist economy.
A little history: The core principles of conservative economic
ideology are grounded in Nobel economist Milton Friedman's 1962
classic "Capitalism and Freedom." Too late to stop President Lyndon
Johnson's Great Society, those principles became the battle cries
energizing conservatives since Reagan: Unrestricted free markets,
free enterprise and free trade; deregulation, privatization and
globalization; trickle-down economics and trickle-up wealth to an
elite plutocracy destined to rule the new American capitalist utopia.
So what happened? Are you guys nuts?
Hey, I'm talking to all you blind Beltway politicians (in both
parties) ... plus the Old Boys Club running Wall Street (into the
ground) ... plus all you fat-cat CEOs (with megamillion
parachutes) ... and all your buddies scamming everybody else to get
on the Forbes 400.
You are proof of Lord Acton's warning: "Power corrupts and absolute
power corrupts absolutely."
It's backfiring! You folks turned our America from a great
capitalistic democracy into a meddling socialist economy. Still you
don't get it. You're acting like teen addicts tripping on an
overdose of "greed-is-good" testosterone while your caricature of
conservative economics would at best make a one-line joke on Jay Leno.
Here are 11 reasons your manipulations are sabotaging the great
principles of leaders like Friedman and Reagan:
1. Dumber than a fifth grader with cognitive dissonance
Kids know what it means. They know most adults today can't see past
the end of their noses. Liberals tune out candidate McBush for being
lost in the past. Conservatives can't hear Obama without seeing that
turban.
Cognitive dissonance simply means most brains cannot see past their
own narrow ideologies. They dismiss any data that contradicts their
old ideologies. Whether you're a conservative Republican or liberal
Democrat, you only hear what you already know is "true." All else is
tuned out.
2. Where did all the leaders go with their moral character?
Friedman's economics requires leaders of moral character. Did it run
into Lord Acton's warning: "Power corrupts, absolute power corrupts
absolutely?" Former Ford and Chrysler CEO Lee Iacocca said yes in
"Where Have All the Leaders Gone?"
Friedman's great conservative principles have been commandeered by
myopic ideologues whose idea of leadership is balancing the demands
of self-interest lobbyists with the need for campaign donations.
Unfortunately, a new "change" president won't be enough; there are
537 elected officials in Washington controlled by 42,000 special
interest lobbyists.
3. Fed and U.S. Treasury adopted Enron accounting tricks
Bad news: Enron failed several years ago because of its off-balance-
sheet accounting scam. The Fed's doing the same thing: Dumping
Bear's $30 billion liabilities onto the taxpayer's "balance sheet."
Next Treasury proposes adding $5.3 trillion more from Fannie Mae and
Freddie Mac.
Unfortunately clever accounting tricks by Treasury Secretary Henry
Paulson and Fed Chairman Ben Bernanke aren't going to fool foreign
lenders analyzing America's creditworthiness. Worse-case scenario:
U.S. Treasury bills with less than a triple-A rating.
With 90 banks on the brink and already too many bail-outs, our so-
called leaders are running out of magic bullets. So now the
taxpayer's "balance sheet" has become the all-purpose "dumping
ground" and it's overcrowding fast as our leaders raise the white
flag of socialism.
4. Deregulation creating new socialist housing system
Back in 1999 a Democratic president and Republican Congress were in
love with a fantasy called the "new economics." Enthusiastic
lobbyists invented the brilliant idea of dismantling the wall
between commercial and investment banking: They killed the Glass-
Steagall Act that was keeping the sleazy hands of short-term
hustlers out of the pockets of long-term lenders.
Flash forward: We lost 85-year-old Bear Sterns and $32 billion
IndyMac. Lehman's iffy. And 90 banks. With the virtual takeover of
Freddie and Fanny, Wall Street's grand experiment with free-market
ideology is backfiring, having socialized the housing market. They
have nobody to blame but their self-centered greed.
5. Trade deficits outsourced more of America's wealth than jobs
One look at Forbes lists of fat cats and you know the 21st Century
doesn't just belong to Asia, it belongs to everyone but America.
Why? Once again, remember Warren Buffett's famous "Farmer's Story"
in Fortune: "We were taught in Economics 101 that countries could
not for long sustain large, ever-growing trade deficits ... our
country has been behaving like an extraordinarily rich family that
possesses an immense farm. In order to consume 4% more than they
produce -- that's the trade deficit -- we have, day by day, been
both selling pieces of the farm and increasing the mortgage on what
we still own."
Friedman was right: Congressional spending is the biggest cause of
inflation, and, wow, those conservatives sure did love blank-check
deficit spending the past eight years!
6. Banking system in meltdown, minting penny stocks
The Friedman conservatives apparently understand Joseph Schumpeter's
"creative destruction." Yet, our free-market ideologues can't seem
to accept that America is now on the "destructive" downside leg of
the cycle, in the economy, markets, trade, politics and, yes, even
their conservative ideology.
You don't have to be smarter than a fifth grader to figure out that
our leaders are clueless about the reality of our crumbling banking
system, with many banks trading as penny stocks, while the Fed still
panders to conservative pre-election politics rather than getting
serious about inflation.
7. Ideologues preach savings, but still push spending
A core principle of conservatism is frugality, saving for the
future. Grandparents raised me, struggled during the Depression,
passed on strong ideals.
Somewhere over the past generation conservatives forget frugality.
This distortion peaked in 2003 when consumers were told to spend,
not sacrifice, and fuel the economy even as government spent
excessively on war. That was a clear breach of every conservative
leader's position in earlier wars.
As a result, in one brief generation, as the power of conservative
ideologues grew, America's savings rate dropped precipitously from
11% in 1980 to less than zero today.
8. Warning, the market's under 2000 peak, losing money
Imagine you're on Jeff Foxworthy's fabulous show competing to see if
you really are smarter than a fifth grader. Question: "If you put
$10,000 in the market in March of 2000 when the Dow peaked at
11,722, how much money would you have today if the market's 10%
under 11,722?" So you guess $9,000.
But then two fifth graders raise their hands: One asks if the CPI
inflation rate should be considered? If so, maybe $5,000 is closer
to the right answer. The other kid wants to know if you're buying
stuff in Chicago or Singapore.
The truth is, the best answer for most adults is: "You've lost a
hell of a lot of money in the market under the grand conservative
ideology the past eight years."
9. Inflation and dollars: Is Zimbabwe the new model for the U.S.?
The Los Angeles Times ran a photo of a Zimbabwe $500 million bank
note <Note: it's $1 BILLION now>, worth $20 at noon, less at dinner.
Why? Inflation's there is running 32 million (yes million!) percent
annually. The German company printing their banknotes finally cut
them off.
Things may be worse in America, psychologically. Our ideological
obsession with "growth" is not working because there is too much
collateral damage, namely inflation. Our dollar has lost substantial
value to the euro because our dysfunctional leaders are convinced
that a trade policy funded by debt makes sense.
Now we owe China $1.3 trillion, sovereign funds want equity not
cheap dollar IOUs, and still our clueless Treasury, and the Fed
continue debasing our currency, printing money like Zimbabwe.
10. Free-market health care failing 47,000,000 Americans
Big Pharma loves free-market conservatism and no-compete Medicare
drug programs. Nobody else is happy. Taxpayers get stuck with the
bill.
"The Coming Generational Storm" tells us that without massive
reforms and big lifestyle changes for taxpayers (especially
retirees), within a couple short decades America's entitlement
programs will eat up the entire federal budget. Medicare is the
biggest cost item in your future -- over $50 trillion in unfunded
liabilities. Conservative ideologues naively believe the answer is
more pay "out-of-pocket" insurance plans, even with 47 million
already uninsured because they can't pay.
Here, as in so many areas of our economy, free-market junkies really
are suffering a severe case of cognitive dissonance, as blind to the
facts about the uninsured as they are to their outdated free-market
fantasies.
11. Conservative free-market policies inflated oil 300%!
Yep, oil inflated 300% in 8 short years under the "leadership of two
oil men."
But, you can't blame them. We put the foxes in the henhouse,
knowing full well "real" oil men love digging holes on the supply
side, supporting ethanol subsidies and blaming speculators -- it's
in their genes!
Talk about cognitive dissonance; real oil men thrive on cowboy
images of Marlboro Men in Hummers, Navigators and F-150 trucks.
Net result? Another perfect example of "creative destruction" in
action as conservative ideology meets "law of unintended
consequences," driving GM, the symbol of America capitalism, closer
to bankruptcy ... while turning America into a socialist economy.
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