Economics / Politics

Maybe the Democratic Congress is overreacting to the Obama compromise. Or, maybe, none of them, ‘Pubs or Democrats, have a clue as to the long-term brutality that will ensue.

“Crises usually are orchestrated years in advance. Any economic recovery typically is shaped by the way in which its predecessor economy collapsed. Medieval Europe’s emergence from the Dark Age, for example, was shaped by ancient Rome’s debt crisis caused by its aggressive oligarchy. In a similar fashion, the coming epochal tax shift off finance and property onto labor will be introduced in response to the dollar’s crisis, in much the way that we have seen Ireland and Greece tap their pension funds to bail out reckless bankers. In America as in Europe, the large “systemically important banks” that caused the crisis will be given enough money by the government – at the expense of labor (“taxpayers”) to step in and “rescue” the bad debt overhang (i.e., toxic junk).

“There are always enough Junk Economics advisors to work on politicians to try and convince them that “doing the right thing” means helping Wall Street. It is not a matter simply of believing that “What’s good for Wall Street is good for the economy.” To hear Tim Geithner and Ben Bernanke tell the story, the economy can’t function without a “solvent” banking system – meaning that no bank is to lose money. All gamblers on the winning side (such as Goldman Sachs) are to be made whole in cases where they cannot collect from bad casino-capitalist gamblers on the losing side (such as A.I.G. and Lehman Brothers).

“Contra Obama’s pretense, cutting taxes for the rich will not spur recovery. The wealthiest 2 per cent do not spend their income on consuming more. They invest it financially – mainly in bonds, establishing more debt claims on the economy. Giving creditors more money will deepen the economy’s debt deflation, shrinking “the market’s” ability to spend on goods and services. And part of the tax subsidy will be recycled into Congressional lobbying and campaign contributions to buy politicians who will promote even more pro-financial deregulatory policies and tax benefits. There still has been no prosecution of banking crime or other financial fraud by large institutions, for example. Nor is there any sign of Attorney General Holder initiating such prosecutions.

“The bottom line is that after the prolonged tax giveaway exacerbates the federal budget deficit – along with the balance-of-payments deficit – we can expect the next Republican or Democratic administration to step in and “save” the country from economic emergency by scaling back Social Security while turning its funding over, Pinochet-style, to Wall Street money managers to loot as they did in Chile. And one can forget rebuilding America’s infrastructure. It is being sold off by debt-strapped cities and states to cover their budget shortfalls resulting from un-taxing real estate and from foreclosures.
“Welcome to debt peonage. This is worse than what was meant by a double-dip recession. It will be with us much longer.”


http://www.counterpunch.org/hudson12082010.html

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