Aug. 10, 2010, 12:45 a.m. EDT
Commentary: How: Gold. Tax cuts. Debts. Wars. Fat Cats. Class gap. No fiscal discipline
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch)—“How my G.O.P. destroyed the U.S. economy.” Yes, that is exactly what David Stockman, President Ronald Reagan’s director of the Office of Management and Budget, wrote in a recent New York Times op-ed piece, “Four Deformations of the Apocalypse.”
Get it? Not “destroying.” The GOP has already “destroyed” the U.S. economy, setting up an “American Apocalypse.”
Jobs recovery could take yearsIn the wake of Friday’s disappointing jobs report, Neal Lipschutz and Phil Izzo discuss new predictions that it could be many years before the nation’s unemployment rate reaches pre-recession levels.
Yes, Stockman is equally damning of the Democrats’ Keynesian policies. But what this indictment by a party insider—someone so close to the development of the Reaganomics ideology—says about America, helps all of us better understand how America’s toxic partisan-politics “holy war” is destroying not just the economy and capitalism, but the America dream. And unless this war stops soon, both parties will succeed in their collective death wish.
But why focus on Stockman’s message? It’s already lost in the 24/7 news cycle. Why? We need some introspection. Ask yourself: How did the great nation of America lose its moral compass and drift so far off course, to where our very survival is threatened?
We’ve arrived at a historic turning point as a nation that no longer needs outside enemies to destroy us, we are committing suicide. Democracy. Capitalism. The American dream. All dying. Why? Because of the economic decisions of the GOP the past 40 years, says this leading Reagan Republican.
Please listen with an open mind, no matter your party affiliation: This makes for a powerful history lesson, because it exposes how both parties are responsible for destroying the U.S. economy. Listen closely:
Reagan Republican: the GOP should file for bankruptcy
Stockman rushes into the ring swinging like a boxer: “If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt ... will soon reach $18 trillion.” It screams “out for austerity and sacrifice.” But instead, the GOP insists “that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.”
In the past 40 years Republican ideology has gone from solid principles to hype and slogans. Stockman says: “Republicans used to believe that prosperity depended upon the regular balancing of accounts—in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses too.”
No more. Today there’s a “new catechism” that’s “little more than money printing and deficit finance, vulgar Keynesianism robed in the ideological vestments of the prosperous classes” making a mockery of GOP ideals. Worse, it has resulted in “serial financial bubbles and Wall Street depredations that have crippled our economy.” Yes, GOP ideals backfired, crippling our economy.
Stockman’s indictment warns that the Republican party’s “new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one:”
Richard Nixon’s gold policies get Stockman’s first assault, for defaulting “on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world.” So for the past 40 years, America’s been living “beyond our means as a nation” on “borrowed prosperity on an epic scale ... an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves.”
Remember Friedman: “Just let the free market set currency exchange rates, he said, and trade deficits will self-correct.” Friedman was wrong by trillions. And unfortunately “once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors.”
And without discipline America was also encouraging “global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve.” Yes, the road to the coming apocalypse began with a Republican president listening to a misguided Nobel economist’s advice.
Stage 2. Crushing debts from domestic excesses, war mongering
Stockman says “the second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40% of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970.” Who’s to blame? Not big-spending Dems, says Stockman, but “from the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.”
Back “in 1981, traditional Republicans supported tax cuts,” but Stockman makes clear, they had to be “matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces—the welfare state and the warfare state—that drive the federal spending machine.”
OK, stop a minute. As you absorb Stockman’s indictment of how his Republican party has “destroyed the U.S. economy,” you’re probably asking yourself why anyone should believe a traitor to the Reagan legacy. I believe party affiliation is irrelevant here. This is a crucial subject that must be explored because it further exposes a dangerous historical trend where politics is so partisan it’s having huge negative consequences.
Yes, the GOP does have a welfare-warfare state: Stockman says “the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending, exempted from the knife most of the domestic budget—entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion.”
When Fed chief Paul Volcker “crushed inflation” in the ‘80s we got a “solid economic rebound.” But then “the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.” By 2009, they “reduced federal revenues to 15% of gross domestic product,” lowest since the 1940s. Still today they’re irrationally demanding an extension of those “unaffordable Bush tax cuts [that] would amount to a bankruptcy filing.”
Recently Bush made matters far worse by “rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures.” Bush also gave in “on domestic spending cuts, signing into law $420 billion in nondefense appropriations, a 65% percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy.” Takes two to tango.
Stockman continues pounding away: “The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector.” He warns that “Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation.” Wrong, not oblivious. Self-interested Republican loyalists like Paulson, Bernanke and Geithner knew exactly what they were doing.
They wanted the economy, markets and the government to be under the absolute control of Wall Street’s too-greedy-to-fail banks. They conned Congress and the Fed into bailing out an estimated $23.7 trillion debt. Worse, they have since destroyed meaningful financial reforms. So Wall Street is now back to business as usual blowing another bigger bubble/bust cycle that will culminate in the coming “American Apocalypse.”
Stockman refers to Wall Street’s surviving banks as “wards of the state.” Wrong, the opposite is true. Wall Street now controls Washington, and its “unproductive” trading is “extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives.” Wall Street banks like Goldman were virtually bankrupt, would have never survived without government-guaranteed deposits and “virtually free money from the Fed’s discount window to cover their bad bets.”
Stage 4. New American Revolution class-warfare coming soon
Finally, thanks to Republican policies that let us “live beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore,” while at home “high-value jobs in goods production ... trade, transportation, information technology and the professions shrunk by 12% to 68 million from 77 million.”
As the apocalypse draws near, Stockman sees a class-rebellion, a new revolution, a war against greed and the wealthy. Soon. The trigger will be the growing gap between economic classes: No wonder “that during the last bubble (from 2002 to 2006) the top 1% of Americans—paid mainly from the Wall Street casino—received two-thirds of the gain in national income, while the bottom 90%—mainly dependent on Main Street’s shrinking economy—got only 12%. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.”
Get it? The decaying fruit of the GOP’s bad economic policies is destroying our economy.
Warning: this black swan won’t be pretty, will shock, soon
His bottom line: “The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing ... it’s a pity that the modern Republican party offers the American people an irrelevant platform of recycled Keynesianism when the old approach—balanced budgets, sound money and financial discipline—is needed more than ever.”
Wrong: There are far bigger things to “pity.”
First, that most Americans, 300 million, are helpless, will do nothing, sit in the bleachers passively watching this deadly partisan game like it’s just another TV reality show.
Second, that, unfortunately, politicians are so deep-in-the-pockets of the Wall Street conspiracy that controls Washington they are helpless and blind.
And third, there’s a depressing sense that Stockman will be dismissed as a traitor, his message lost in the 24/7 news cycle ... until the final apocalyptic event, an unpredictable black swan triggers another, bigger global meltdown, followed by a long Great Depression II and a historic class war.
So be prepared, it will hit soon, when you least expect.
SACRAMENTO, Calif. — Billionaire Republican Meg Whitman reported Monday that she has spent more than $99 million in her quest to become California’s governor, while Democrat Jerry Brown is saving money for what could become the most expensive gubernatorial contest in American history.
The former eBay chief executive reported Monday that she spent nearly $20 million in the six-week period ending June 30, which included the weeks immediately before and after California’s primary. Her campaign said the first-time candidate spent $71 million to win the GOP primary against state Insurance Commissioner Steve Poizner.
Brown, who faced no serious challenger in the Democratic primary, has spent just $450,000 on his race to date, although the number climbs to $774,000 once donated services are included. Whitman’s figure jumps to $100.3 million when such services are included.
Brown has $23 million cash on hand, while Whitman has about $10.3 million.
While the former two-term governor and current state attorney general courts donors, Brown’s campaign has been buoyed by spending from union-funded groups. That includes nearly $4 million in television and radio ads in the six-week period from California Working Families. The group reported that it raised $5.8 million during the period.
A poll released last week by the Public Policy Institute of California found the candidates about even among likely voters, with 37 percent backing Brown and 34 percent favoring Whitman. A quarter of respondents were still undecided.
Whitman has given her campaign $91 million of her own money and continues to aggressively court donors, bringing in $3.3 million from outside sources in the six weeks ending June 30. Brown reported he had raised slightly more than $2.6 million.
He received $13,800 in May from DreamWorks Animation SKG Inc. founder Jeffrey Katzenberg and the same amount from his wife, Marilyn. Publisher William Randolph Hearst III contributed $38,800 a week before the June 8 primary. His contribution covered the primary and general elections.
Whole Foods Inc. president Walter Robb gave Brown $20,809.
Whitman’s high-profile contributors included some of Gov. Arnold Schwarzenegger’s biggest benefactors: Berkshire Hathaway executive Charles Munger Jr., who gave Whitman the maximum $25,900 contribution; Spanish-language television magnate Jerry Perenchio and his wife, Margaret, who each gave $25,900; Los Angeles philanthropist Eli Broad, who gave $25,900; and Barron Hilton, chairman of the Hilton Hotels empire, who gave $20,000.
Whitman’s roster of Republican staffers includes many former Schwarzenegger advisers, including her top political consultant, Mike Murphy, who makes $90,000 a month.
By contrast, Brown’s report showed he had just four employees through the end of June, as well as campaign manager Steven Glazer, who was paid $30,000 during the six-week period.
Brown’s donated services include the $1,995 monthly rent for an apartment in Oakland used by Brown’s Los Angeles campaign staff, as well as $600 in janitorial services for his campaign office.
Brown’s tightfisted approach has worried some fellow Democrats who want him to respond to Whitman’s attacks, but Brown has been getting help all summer from union-funded groups that have launched their own television and radio attacks against Whitman.
The 85,000-member California Nurses Association has been among the groups benefiting Brown. It has staged rallies at her campaign events and private fundraisers, parading an actress dressed as “Queen Meg.”
Other candidates seeking statewide office also reported their fundraising and spending numbers on Monday, which was the reporting deadline for candidates, major donors and committees supporting and opposing ballot initiatives.
In the lieutenant governor’s race, San Francisco Mayor Gavin Newsom netted more than $337,000 in monetary contributions in just six weeks and spent a hefty $453,000. Newsom has about $495,000 in the bank, while his opponent, Republican incumbent Abel Maldonado, has just $90,000 cash on hand. The former state senator, appointed to the job in April by Schwarzenegger, also reported $261,000 in debt.
In the secretary of state’s race, Irvine real estate developer and former NFL player Damon Dunn netted nearly double the contributions of incumbent Democrat Debra Bowen. Dunn, a Republican, has about $176,000 on hand, while Bowen has just more than $113,000.
Republican attorney general hopeful Steve Cooley, the Los Angeles County district attorney, received $341,000 in new contributions and spent $530,000, leaving him with just more than $121,000 on hand. His opponent, San Francisco County District Attorney Kamala Harris, had not yet filed her latest report by Monday evening.
State controller John Chiang, a Democrat, had raised $125,000 in his bid to retain his seat, leaving him with nearly $1.3 million on hand. His opponent, Republican state Sen. Tony Strickland, raised $173,000 and has about $309,000 on hand.
Democrats blasted the Republicans for their close ties with the Tea Party movement, warning that some Tea Party ideas could find their way into Republican policies.
Land Ownership at the Crux of Haiti’s Stalled Reconstruction
Written by Kim Ives
Wednesday, 14 July 2010 14:00
Source: Haiti Liberte
At a UN Conference on Mar. 31, about 60 countries and multilateral banks promised $5.3 billion for Haiti’s reconstruction over the next 18 months. Only about 10% of those promises have been delivered on (some of it just forgiven debt), and of that money delivered into a World Bank managed fund, only a fraction has been spent to help Haiti.
Meanwhile, private citizens around the world gave hundreds of millions of dollars to NGOs and impromptu efforts like the Clinton-Bush Foundation, but (where statistics are available) less than 25% of those contributions, sometimes much less, have been spent while desperation in Haiti grows. Much of the blame for Haiti’s faltering recovery has focused on this trickling release of money and the disorganization of inefficient, administratively costly NGOs which have received most of the funds to date.
But big NGOs reply that they are ready to build new storm resistant houses – the most urgent priority, everybody agrees, as the hurricane season bears down on the 1.7 million displaced people still living under tents and tarps. The problem, Bekele Gelata, the secretary general of the International Federation of Red Cross Societies said last week, is that the Haitian government has not provided open land on which to build large numbers of houses. “We have high hopes that the Red Cross will get a little land soon,” he said.
In this way, the Jan. 12 earthquake reveals that the principal fault-line in Haiti is not geological but one of class. A small handful of rich families own large tracts of land in suburban Port-au-Prince which would be ideal for resettling the displaced thousands. The lands are located near the city, often with water and some trees, and are largely undeveloped.
However, these same families control the Haitian government and, more importantly, have great influence in the newly formed 26-member Interim Commission to Reconstruct Haiti (CIRH), co-chaired by former President Bill Clinton and Haitian Prime Minister Jean-Max Bellerive. Thirteen of the CIRH directors represent multilateral banks like the IMF, World Bank, and Inter-American Development Bank and donor nations like the U.S., France and Canada. The other thirteen members represent Haiti’s elite.
The most prominent elite representative on the CIRH is Reginald Boulos, who heads one of the Haitian bourgeoisie’s most powerful families and backed both the 1991-94 and 2004-06 coups d’état against former Haitian President Jean-Bertrand Aristide. (Despite regular and massive demonstrations asking for the Haitian government to facilitate his return, Aristide remains in exile in South Africa, without a passport or laisser-passer to return home.)
The CIRH is empowered for the next 18 months under a “State of Emergency Law” to seize land for rebuilding as it sees fit. (It is no coincidence that the time period for the “state of emergency” and the $5 billion injection coincide). But the elite families on this body in charge of expropriations are not volunteering their own well-situated land to benefit Haiti’s homeless.
As a result, only one major displaced person camp, Corail-Cesselesse, has been built about 10 miles north of the capital, on a forbidding strip of sun-baked desert situated between Titayen and Morne Cabrit, two desolate zones where death-squads dumped their victims during the anti-Aristide coups. The 6,000 person camp is several kilometers from Route National One, where transport toward the capital runs. One resident said he had to leave the camp at 4 a.m. for a three hour commute to his job in the city. Another resident said bus fares cost $1, a lot of money in Haiti.
Long-time democracy activist Patrick Elie told Democracy Now! on the quake’s six month anniversary that “the Haitian elites over centuries [have] appropriated land which [...], especially after independence and the end of slavery, would have been common property, and they appropriated vast tract of land, pushing the peasants – the newly freed slaved who did not want to work on the plantation system anymore – to the mountains.”
This appropriation process – some call it theft – is not ancient history. Some of Haiti’s best suited land for post-quake resettlements is located just north of the capital between the Freres Road and Tabarre. Over the past 25 years, Haiti’s bourgeoisie bought up large swaths of this fertile valley, where the Haitian American Sugar Company used to grow sugarcane. Now it is home to a Miami-style luxury home development known as Belle-Ville, an amusement park for rich kids , the Vorbe family car dealership, Brazil’s military base (Brabatt), and a giant new U.S. Embassy, among other things. “The elite paid the peasants pennies for the land not long ago, pushing them off,” Elie told Haiti Liberté. “Now they will look to sell it for a huge profit.”
The bourgeoisie has placed itself in charge of resettlement and is looking to make a killing. “The government had appointed Gerard-Emile ‘Aby’ Brun, president of Nabatec Development, a consortium owned by some of Haiti’s most powerful families, to be in charge of relocating the squatter camps in Port-au-Prince,” explained the AP’s Jonathon Katz in a Jul. 11 story. Brun then put Corail-Cesselesse on land owned by Nabatec, thereby making his company “first in line to gain part of $7 million the government will spend compensating landowners.”
And, Katz continues, “that’s just a small part of the potential payoff. Nabatec is also a lead negotiator with South Korean garment firms to build factories that Haitian officials say will likely go into Corail-Cesselesse.” Forty years ago, Cité Soleil, Haiti’s biggest and worst slum, was also built as a model development (then Cité Simone) to provide workers for the first industrial park near the airport, built and owned by the same wealthy families with U.S. support.
So the bourgeoisie keeps its best land and sells its worst for a huge, guaranteed profit. This is the Haitian equivalent of the U.S. bank bailout.
In this way, the Préval government and CIRH appear ready to squander the millions contributed to Haiti by buying land at inflated prices from the bourgeoisie, land which was often stolen or obtained by ruse in the first place.
Land is also needed to grow food for Haiti’s increasingly hungry masses, especially as post-quake humanitarian aid begins to drop off. Haiti’s bourgeoisie and big landowners are more interested in building assembly industries, office buildings and luxury homes, not on developing fields of rice, millet or corn. In the past six months, four new industrial parks, according to one report, have been built to take advantage of Haiti’s $3 a day minimum wage.
This struggle for Haiti’s principal means of production – the land – has now been thrown into sharp relief as sharks and vultures use this moment of a weakened state to expand their real estate holdings, not contribute them to their devastated compatriots.
A good example of this is in Ganthier, a town of about 72,000 located 18 miles east of the capital near the Dominican border. Half the town’s residents are peasant farmers who survive by farming on state lands used as a commons to grow food for over 80 years. But in recent weeks, two businessmen have laid claim to this state land.
Two weeks ago, the businessmen sent out a bulldozer that began to clear the peasants’ plots. The peasants banded together, burned the bulldozer, and blocked the road from the border. The local mayor, Ralph Lapointe sided with the peasants and was arrested for a few hours. He credits his partial freedom to immediate local protests and barricades. His office’s general director was imprisoned for more than 24 hours.
“We are both now under virtual house arrest,” he told journalists from Haiti Liberté and Democracy Now! “My life is in danger if I leave my home. As a government representative, I am supposed to defend the interests of the local population. Instead the judicial authorities are allying themselves with the marauding businessmen and are attacking the peasants and those that defend them, like myself.”
Meanwhile the interlopers, armed with false deeds to the land (the elite’s age-old weapon of choice), have enlisted the police in a manhunt for the leaders of the peasant rebellion against the land grab. Mayor Lapointe identified the two businessmen trying to take the land as Frank Galette and Gérald Brutus. “Because I don’t agree with their actions, they have promised to assassinate me,” the mayor said.
This stand-off in Ganthier does not bode well for Haiti’s reconstruction under the leadership of Préval and the CIRH. To build Haiti back better, Haitian authorities will need to expropriate at least some of the land the elite has stolen and accumulated over the past 200 years. Instead, landowners’ thugs, often in concert with police and UN troops, are brutally uprooting people, often at gunpoint and at night, from spontaneous settlements without giving them any alternative homes. The internally displaced just have to move farther up the mountainsides or further into the Arizona-like desert north of the capital.
Of course, seizing the ruling class’ land would exacerbate the already simmering class war, of which Ganthier is just an opening skirmish. “The landowners say if they’re not compensated, the ‘new Haiti’ in Corail-Cesselesse will end up making the violent slums of pre-quake Port-au-Prince look tame,” Katz wrote. “Every squatter seems to have had an encounter with gangsters they believe are sent by landowners.”
The need was there before, but the earthquake made it even more crying. Haiti needs a social revolution where the land of the rich is transferred to the ownership of the poor – that is, nationalized, as it was under Dessalines – so that it can serve not just as a means of production but also to build shelters from the coming storms.
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