Just read an excellent piece on the second wave of the economic crisis
that's about to hit us, and what should be done about it. Article
athttp://counterpunch.org/roberts01222009.html.

A note on the source: Counterpunch is the decidedly left-wing soapbox of
one of my favorite commentators, Alex Cockburn. However, unlike most on
the left, he brings in a wide range of points of view, many of which
surprisingly coincide with his own.

For those who object to the opinions of lefties, a word on the author of
this piece: from the mini-bio at the end of the article:

Paul Craig Roberts was Assistant Secretary of the Treasury in the
Reagan administration. He is coauthor of The Tyranny of Good Intentions.


================================================== =====================

Another Real Estate Crisis is About to Hit

By PAUL CRAIG ROBERTS

For a picture of the US real estate crisis, imagine New Orleans wrecked
by Hurricane Katrina, and before the waters even begin to recede, a
second Katrina hits.

The 1,120,000 lost US retail jobs in 2008 are a signal that the second
stage of the real estate bust is about to hit the economy. This time it
will be commercial real estate--shopping malls, strip malls, warehouses,
and office buildings. As businesses close and rents decline, the ability
to service the mortgages on the over-built commercial real estate
disappears.

The over-building was helped along by the irresponsibly low interest
rates, but the main impetus came from the slide of the US saving rate to
zero and the rise in household indebtedness. The shrinkage of savings
and the increase in debt raised consumer spending to 72% of GDP. The
proliferation of malls and the warehouses that service them reflect the
rise in consumer spending as a share of GDP.

Like the federal government, consumers spent more than they earned and
borrowed to cover the difference. Obviously, this could not go on
forever, and consumer debt has reached its limit.

Shopping malls are losing anchor stores, and large chains are closing
stores and even going out of business altogether. Developers who
borrowed to finance commercial ventures are in trouble as are the
holders of the mortgages, derivatives and other financial junk
associated with the loans.

The main source of the economic crisis is the infantile belief of US
policymakers that an economy could be based on debt expansion. As
offshoring moved jobs, incomes, and GDP out of the country, debt
expanded to take the place of the missing income. When the offshored
goods and services were brought back to be sold to Americans, the trade
deficit rose, adding another level of financing for an economy that
consumes more than it produces.

The growth of debt has outpaced the growth of real output. Yet, the
solution offered by Obama’s economic team is to expand debt further.
This is not surprising as Obama’s economic team consists of the very
people who brought on the debt crisis. Now they are going to make it worse.

The unexamined question is: Who is going to finance the next wave of debt?

The US budget deficit for fiscal year 2009 already appears to be on a
path to $2 trillion, and that is before Obama’s stimulus program. What
we are looking at is a $3 trillion budget deficit if Obama’s program is
enacted in time to impact the economy this year.

Foreign countries can finance a $500 billion US budget deficit out of
their trade surpluses with the US. But foreigners do not have the funds
to finance a US budget deficit in the trillions of dollars, and they
would not finance such a deficit even if they had the funds. Foreigners
are over-weighted in dollar holdings and prefer to lighten their holding
than to add to them. America’s economic prospects are dim as are the
dollar’s prospects as reserve currency. An annual budget deficit in the
trillions of dollars makes the dollar’s prospects appear even dimmer.

The federal government’s likely solution to the debt problem will be to
monetize the debt, that is, the government will finance its deficit by
printing money. Debt will be inflated away. But for those Americans
without jobs or whose incomes do not rise with inflation, life will be
cruel.

Life is already cruel for Americans living on retirement savings. Not
only has the stock market bust reduced their wealth by half, but also
their remaining assets are producing no income. Interest rates are so
low that debt instruments produce no income, and there are scant capital
gains in the stock market. Retirees are living by consuming their capital.

America’s economic policy of low interest rates and debt expansion bodes
ill for everyone living off their savings. Their future prospects are
even worse as high inflation will destroy the value of their savings,
especially if held in cash or debt instruments, including “safe” US
Treasuries.

There are more intelligent ways to try to escape from the current
crisis. However, the financial gangsters and their shills that Obama has
put in charge of economic policy are thinking only of their own
interest. What happens to the American people is not a concern.

A compassionate government would handle the crisis in this way:

The trillions of dollars in credit default swaps (CDS) should be
declared null and void. These “swaps” are simply bets that financial
instruments and companies will fail, and the bulk of the bets are made
by people and institutions that do not hold the financial instruments or
shares in the companies. The ideology that financial markets were
self-regulating allowed illegal gambling free rein. There is no reason
under the sun for taxpayers to bail out gamblers.

The bailout money, instead of being given to favored financial
institutions to finance their acquisition of other institutions, should
be used to refinance the defaulting mortgages. This would slow, if not
stop, the growing inventory of foreclosed properties that is driving
down home prices.

The mark-to-market rule should be suspended until the real values of the
troubled properties and instruments can be determined. Suspension of the
rule would prevent the failure of sound institutions and lessen the need
for a bailout.

Interest rates have to be raised in order to encourage saving and to
provide incomes to retirees.

To preserve the dollar’s status as reserve currency, a credible policy
of reducing both budget and trade deficits must be announced. In the
near term the budget deficit can be reduced by $500 billion by
withdrawing from Iraq and Afghanistan and by cutting a bloated defense
budget that represents the now unattainable goal of US world hegemony.

The trade deficit can be significantly reduced by bringing offshored
jobs back to America. One way to do this is to tax corporations
according to the value added to their output that occurs in the US.
Corporations that produce their products for US markets abroad would
have high tax rates; those that produce domestically would have low tax
rates.

This approach to the economic crisis stands in marked contrast with the
approach of the gangsters running US economic policy. The gangsters are
using the crisis as an opportunity to steal from taxpayers and to
finance their misdeeds and exorbitant salaries with Federal Reserve
loans. Their shills among economists and the financial press tell the
people that the solution is to fatten up the banks with funds so they
will resume lending to an over-indebted public that will then return to
the shopping malls.

This unrealistic approach to a serious crisis indicates a leadership
crisis on top of an economic crisis.

================================================== ========================
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan
administration. He is coauthor of The Tyranny of Good Intentions. He can
be reached at: .


--
"I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson

On Jan 22, 2:29*pm, David Nebenzahl wrote:
Just read an excellent piece on the second wave of the economic crisis
that's about to hit us, and what should be done about it. Article
athttp://counterpunch.org/roberts01222009.html.

A note on the source: Counterpunch is the decidedly left-wing soapbox of
one of my favorite commentators, Alex Cockburn. However, unlike most on
the left, he brings in a wide range of points of view, many of which
surprisingly coincide with his own.

For those who object to the opinions of lefties, a word on the author of
this piece: from the mini-bio at the end of the article:

* *Paul Craig Roberts was Assistant Secretary of the Treasury in the
* *Reagan administration. He is coauthor of The Tyranny of Good Intentions.

================================================== =====================

Another Real Estate Crisis is About to Hit

By PAUL CRAIG ROBERTS

For a picture of the US real estate crisis, imagine New Orleans wrecked
by Hurricane Katrina, and before the waters even begin to recede, a
second Katrina hits.

The 1,120,000 lost US retail jobs in 2008 are a signal that the second
stage of the real estate bust is about to hit the economy. This time it
will be commercial real estate--shopping malls, strip malls, warehouses,
and office buildings. As businesses close and rents decline, the ability
to service the mortgages on the over-built commercial real estate
disappears.

The over-building was helped along by the irresponsibly low interest
rates, but the main impetus came from the slide of the US saving rate to
zero and the rise in household indebtedness. The shrinkage of savings
and the increase in debt raised consumer spending to 72% of GDP. The
proliferation of malls and the warehouses that service them reflect the
rise in consumer spending as a share of GDP.

Like the federal government, consumers spent more than they earned and
borrowed to cover the difference. Obviously, this could not go on
forever, and consumer debt has reached its limit.

Shopping malls are losing anchor stores, and large chains are closing
stores and even going out of business altogether. Developers who
borrowed to finance commercial ventures are in trouble as are the
holders of the mortgages, derivatives and other financial junk
associated with the loans.

The main source of the economic crisis is the infantile belief of US
policymakers that an economy could be based on debt expansion. As
offshoring moved jobs, incomes, and GDP out of the country, debt
expanded to take the place of the missing income. When the offshored
goods and services were brought back to be sold to Americans, the trade
deficit rose, adding another level of financing for an economy that
consumes more than it produces.

The growth of debt has outpaced the growth of real output. Yet, the
solution offered by Obama’s economic team is to expand debt further.
This is not surprising as Obama’s economic team consists of the very
people who brought on the debt crisis. Now they are going to make it worse.

The unexamined question is: Who is going to finance the next wave of debt?

The US budget deficit for fiscal year 2009 already appears to be on a
path to $2 trillion, and that is before Obama’s stimulus program. What
we are looking at is a $3 trillion budget deficit if Obama’s program is
enacted in time to impact the economy this year.

Foreign countries can finance a $500 billion US budget deficit out of
their trade surpluses with the US. But foreigners do not have the funds
to finance a US budget deficit in the trillions of dollars, and they
would not finance such a deficit even if they had the funds. Foreigners
are over-weighted in dollar holdings and prefer to lighten their holding
than to add to them. America’s economic prospects are dim as are the
dollar’s prospects as reserve currency. An annual budget deficit in the
trillions of dollars makes the dollar’s prospects appear even dimmer.

The federal government’s likely solution to the debt problem will be to
monetize the debt, that is, the government will finance its deficit by
printing money. Debt will be inflated away. But for those Americans
without jobs or whose incomes do not rise with inflation, life will be
cruel.

Life is already cruel for Americans living on retirement savings. Not
only has the stock market bust reduced their wealth by half, but also
their remaining assets are producing no income. Interest rates are so
low that debt instruments produce no income, and there are scant capital
gains in the stock market. Retirees are living by consuming their capital..

America’s economic policy of low interest rates and debt expansion bodes
ill for everyone living off their savings. Their future prospects are
even worse as high inflation will destroy the value of their savings,
especially if held in cash or debt instruments, including “safe” US
Treasuries.

There are more intelligent ways to try to escape from the current
crisis. However, the financial gangsters and their shills that Obama has
put in charge of economic policy are thinking only of their own
interest. What happens to the American people is not a concern.

A compassionate government would handle the crisis in this way:

The trillions of dollars in credit default swaps (CDS) should be
declared null and void. These “swaps” are simply bets that financial
instruments and companies will fail, and the bulk of the bets are made
by people and institutions that do not hold the financial instruments or
shares in the companies. The ideology that financial markets were
self-regulating allowed illegal gambling free rein. There is no reason
under the sun for taxpayers to bail out gamblers.

The bailout money, instead of being given to favored financial
institutions to finance their acquisition of other institutions, should
be used to refinance the defaulting mortgages. This would slow, if not
stop, the growing inventory of foreclosed properties that is driving
down home prices.

The mark-to-market rule should be suspended until the real values of the
troubled properties and instruments can be determined. Suspension of the
rule would prevent the failure of sound institutions and lessen the need
for a bailout.

Interest rates have to be raised in order to encourage saving and to
provide incomes to retirees.

To preserve the dollar’s status as reserve currency, a credible policy
of reducing both budget and trade deficits must be announced. In the
near term the budget deficit can be reduced by $500 billion by
withdrawing from Iraq and Afghanistan and by cutting a bloated defense
budget that represents the now unattainable goal of US world hegemony.

The trade deficit can be significantly reduced by bringing offshored
jobs back to America. One way to do this is to tax corporations
according to the value added to their output that occurs in the US.
Corporations that produce their products for US markets abroad would
have high tax rates; those that produce domestically would have low tax
rates.

This approach to the economic crisis stands in marked contrast with the
approach of the gangsters running US economic policy. The gangsters are
using the crisis as an opportunity to steal from taxpayers and to
finance their misdeeds and exorbitant salaries with Federal Reserve
loans. Their shills among economists and the financial press tell the
people that the solution is to fatten up the banks with funds so they
will resume lending to an over-indebted public that will then return to
the shopping malls.

This unrealistic approach to a serious crisis indicates a leadership
crisis on top of an economic crisis.

================================================== ========================
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan
administration. He is coauthor of The Tyranny of Good Intentions. He can
be reached at: .

--
* "I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson

Economics is neither left or right just remember on whose watch this
crises came. I believe that a few people are walking away with tons
and tons of our money.

On 1/22/2009 11:44 AM spake thus:

On Jan 22, 2:29 pm, David Nebenzahl wrote:

[snip]

Economics is neither left or right just remember on whose watch this
crises came. I believe that a few people are walking away with tons
and tons of our money.

Your comment is appreciated, but could you please learn to *trim your
posts*, and not quote the entire text before your 3-line reply?


--
"I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson

network news says 200,000 stores nationwide will close this year and
3000 malls will go bankrupt.

our spend credit spend economy was a house of cards blown over by the
wind.

yeah things will get much worse, we no longer produce anything

On Jan 22, 2:29*pm, David Nebenzahl wrote:
Just read an excellent piece on the second wave of the economic crisis
that's about to hit us, and what should be done about it. Article
athttp://counterpunch.org/roberts01222009.html.

A note on the source: Counterpunch is the decidedly left-wing soapbox of
one of my favorite commentators, Alex Cockburn. However, unlike most on
the left, he brings in a wide range of points of view, many of which
surprisingly coincide with his own.

For those who object to the opinions of lefties, a word on the author of
this piece: from the mini-bio at the end of the article:

* *Paul Craig Roberts was Assistant Secretary of the Treasury in the
* *Reagan administration. He is coauthor of The Tyranny of Good Intentions.

================================================== =====================

Another Real Estate Crisis is About to Hit

By PAUL CRAIG ROBERTS

For a picture of the US real estate crisis, imagine New Orleans wrecked
by Hurricane Katrina, and before the waters even begin to recede, a
second Katrina hits.

The 1,120,000 lost US retail jobs in 2008 are a signal that the second
stage of the real estate bust is about to hit the economy. This time it
will be commercial real estate--shopping malls, strip malls, warehouses,
and office buildings. As businesses close and rents decline, the ability
to service the mortgages on the over-built commercial real estate
disappears.

The over-building was helped along by the irresponsibly low interest
rates, but the main impetus came from the slide of the US saving rate to
zero and the rise in household indebtedness. The shrinkage of savings
and the increase in debt raised consumer spending to 72% of GDP. The
proliferation of malls and the warehouses that service them reflect the
rise in consumer spending as a share of GDP.

Like the federal government, consumers spent more than they earned and
borrowed to cover the difference. Obviously, this could not go on
forever, and consumer debt has reached its limit.

Shopping malls are losing anchor stores, and large chains are closing
stores and even going out of business altogether. Developers who
borrowed to finance commercial ventures are in trouble as are the
holders of the mortgages, derivatives and other financial junk
associated with the loans.

The main source of the economic crisis is the infantile belief of US
policymakers that an economy could be based on debt expansion. As
offshoring moved jobs, incomes, and GDP out of the country, debt
expanded to take the place of the missing income. When the offshored
goods and services were brought back to be sold to Americans, the trade
deficit rose, adding another level of financing for an economy that
consumes more than it produces.

The growth of debt has outpaced the growth of real output. Yet, the
solution offered by Obama’s economic team is to expand debt further.
This is not surprising as Obama’s economic team consists of the very
people who brought on the debt crisis. Now they are going to make it worse.

The unexamined question is: Who is going to finance the next wave of debt?

The US budget deficit for fiscal year 2009 already appears to be on a
path to $2 trillion, and that is before Obama’s stimulus program. What
we are looking at is a $3 trillion budget deficit if Obama’s program is
enacted in time to impact the economy this year.

Foreign countries can finance a $500 billion US budget deficit out of
their trade surpluses with the US. But foreigners do not have the funds
to finance a US budget deficit in the trillions of dollars, and they
would not finance such a deficit even if they had the funds. Foreigners
are over-weighted in dollar holdings and prefer to lighten their holding
than to add to them. America’s economic prospects are dim as are the
dollar’s prospects as reserve currency. An annual budget deficit in the
trillions of dollars makes the dollar’s prospects appear even dimmer.

The federal government’s likely solution to the debt problem will be to
monetize the debt, that is, the government will finance its deficit by
printing money. Debt will be inflated away. But for those Americans
without jobs or whose incomes do not rise with inflation, life will be
cruel.

Life is already cruel for Americans living on retirement savings. Not
only has the stock market bust reduced their wealth by half, but also
their remaining assets are producing no income. Interest rates are so
low that debt instruments produce no income, and there are scant capital
gains in the stock market. Retirees are living by consuming their capital..

America’s economic policy of low interest rates and debt expansion bodes
ill for everyone living off their savings. Their future prospects are
even worse as high inflation will destroy the value of their savings,
especially if held in cash or debt instruments, including “safe” US
Treasuries.

There are more intelligent ways to try to escape from the current
crisis. However, the financial gangsters and their shills that Obama has
put in charge of economic policy are thinking only of their own
interest. What happens to the American people is not a concern.

A compassionate government would handle the crisis in this way:

The trillions of dollars in credit default swaps (CDS) should be
declared null and void. These “swaps” are simply bets that financial
instruments and companies will fail, and the bulk of the bets are made
by people and institutions that do not hold the financial instruments or
shares in the companies. The ideology that financial markets were
self-regulating allowed illegal gambling free rein. There is no reason
under the sun for taxpayers to bail out gamblers.



A naive and foolish move, that would do NOTHING to stem the problem.
They are bets in the same sense that individuals, institutions, and
even govts make use of similar derivative markets, like futures on
Euros, bonds, energy prices, stocks, etc. And only a fool would seek
to declare them null and void. The problem isn't that they exist.
It's that some parties to them, like Lehman, Bear Stearns, ML, etc
took on too much exposure and can't pay off on them. So, why would
you just let everyone off the hook, including those parties that are
still solvent and can pay? It's like having a hurricane wipe out over
exposed insurance companies and then the govt declaring all insurance
policies null and void. So, now the guy with a policy from XYZ
insurance, who could still pay, gets nothing. Hmmm, do they still
get to keep the premium too? What a moron.



The bailout money, instead of being given to favored financial
institutions to finance their acquisition of other institutions, should
be used to refinance the defaulting mortgages. This would slow, if not
stop, the growing inventory of foreclosed properties that is driving
down home prices.

Using some of it to refinance mortgages could be a good idea. Now
let;s look at a practical example. The sub prime mortgage is for
$300K on a property now worth $200K. There is a single wage earner,
now making $50K. The mortgage is held by XYZ bank. What exactly do
you do here?




The mark-to-market rule should be suspended until the real values of the
troubled properties and instruments can be determined. Suspension of the
rule would prevent the failure of sound institutions and lessen the need
for a bailout.


Another possible idea, but for rather strange for someone that is
complaining about irresponsibility and what low interest rates
supposedly caused. Suspending MTM just means that institutions can
carry assets on their books at no where near their true value. In
essence, it too is a sham to try to keep us divorced from reality and
to get by for awhile longer.



Interest rates have to be raised in order to encourage saving and to
provide incomes to retirees.


Now that is laughable. Raise interest rates? Any sane economist
will tell you that is the worst thing you could do at this point.
You think people and businesses are in trouble now? What do you
think will happen when interest rates head up? It was the FED raising
interest rates together with high oil prices that put the economy into
recession to begin with. Raising them now would surely create a
depression.




To preserve the dollar’s status as reserve currency, a credible policy
of reducing both budget and trade deficits must be announced. In the
near term the budget deficit can be reduced by $500 billion by
withdrawing from Iraq and Afghanistan and by cutting a bloated defense
budget that represents the now unattainable goal of US world hegemony.

Spoken like a true lib out of touch with reality. Again, any same
economist will tell you that budget deficits are a stimulus and you
would never want to sharply decrease them in a recession. Anyone
remember the 30's? There is nothing wrong with running them some of
the time, like during a recession. The problem is, politicians forgot
the other half of the equation, which is that you need to run
surpluses during the good times, to pay down some of the debt.
Having failed to heed that, let
s not commit suicide by trying to bring a budget into balance during
an economic crisis.

Also, if the prospects of deficits are such a problem internationally,
why is it that the dollar is doing better now than it was before all
the economic crap hit the fan? Answer: because so far, the us is
still perceived as a safe haven in an uncertain world.




The trade deficit can be significantly reduced by bringing offshored
jobs back to America. One way to do this is to tax corporations
according to the value added to their output that occurs in the US.
Corporations that produce their products for US markets abroad would
have high tax rates; those that produce domestically would have low tax
rates.

Sounds like a VAT tax. If you wanted to switch to a form of VAT tax
and eliminate the income tax, that would be an interesting idea.
However, the chance of getting that done is about zippo.




This approach to the economic crisis stands in marked contrast with the
approach of the gangsters running US economic policy. The gangsters are
using the crisis as an opportunity to steal from taxpayers and to
finance their misdeeds and exorbitant salaries with Federal Reserve
loans. Their shills among economists and the financial press tell the
people that the solution is to fatten up the banks with funds so they
will resume lending to an over-indebted public that will then return to
the shopping malls.

This unrealistic approach to a serious crisis indicates a leadership
crisis on top of an economic crisis.

Does that include Obama too? I thought he was the savior bringing
change?






================================================== ========================
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan
administration. He is coauthor of The Tyranny of Good Intentions. He can
be reached at: .

--

Which goes to show you that even the best administrations have to have
a few kooks.



* "I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson

On 1/22/2009 1:24 PM spake thus:

On Jan 22, 2:29 pm, David Nebenzahl wrote
[quoting from an article]:

This unrealistic approach to a serious crisis indicates a leadership
crisis on top of an economic crisis.

Does that include Obama too? I thought he was the savior bringing
change?

Your apparent knee-jerk hatred of anything to the left of Karl Rove has
apparently eroded your reading comprehension. Try re-reading the
article, especially the part where Roberts mentions Obama.


--
"I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson

On Thu, 22 Jan 2009 11:29:15 -0800, David Nebenzahl wrote:

Just read an excellent piece on the second wave of the economic crisis
that's about to hit us, and what should be done about it. Article
athttp://counterpunch.org/roberts01222009.html.

A note on the source: Counterpunch is the decidedly left-wing soapbox of
one of my favorite commentators, Alex Cockburn. However, unlike most on
the left, he brings in a wide range of points of view, many of which
surprisingly coincide with his own.

For those who object to the opinions of lefties, a word on the author of
this piece: from the mini-bio at the end of the article:

Paul Craig Roberts was Assistant Secretary of the Treasury in the
Reagan administration. He is coauthor of The Tyranny of Good Intentions.


================================================== =====================

Another Real Estate Crisis is About to Hit

By PAUL CRAIG ROBERTS

For a picture of the US real estate crisis, imagine New Orleans wrecked
by Hurricane Katrina, and before the waters even begin to recede, a
second Katrina hits.

The 1,120,000 lost US retail jobs in 2008 are a signal that the second
stage of the real estate bust is about to hit the economy. This time it
will be commercial real estate--shopping malls, strip malls, warehouses,
and office buildings. As businesses close and rents decline, the ability
to service the mortgages on the over-built commercial real estate
disappears.

The over-building was helped along by the irresponsibly low interest
rates, but the main impetus came from the slide of the US saving rate to
zero and the rise in household indebtedness. The shrinkage of savings
and the increase in debt raised consumer spending to 72% of GDP. The
proliferation of malls and the warehouses that service them reflect the
rise in consumer spending as a share of GDP.


And the government's response to irresponsibly low interest rates is to
lower the interest rate even further! And brainless Obama endorsed this
action.

As a real estate investor and rental owner, I would urge people NOT to
sell their homes or rental units, no matter what, because the selling
frenzy (as we've seen on Wall St.) is just making things worse.
Instead, trim back on buying all those things you don't need: new
shoes, matching candle sets, cute little salt shakers, etc.
Good luck everyone,
Brian
http://www.ezlandlordforms.com/documents/

The OP David, wrote:

Just read an excellent piece on the second wave of the economic
crisis
that's about to hit us, and what should be done about it. Article
athttp://counterpunch.org/roberts01222009.html.

A note on the source: Counterpunch is the decidedly left-wing soapbox
of
one of my favorite commentators, Alex Cockburn. However, unlike most
on
the left, he brings in a wide range of points of view, many of which
surprisingly coincide with his own.

For those who object to the opinions of lefties, a word on the author
of
this piece: from the mini-bio at the end of the article:

Paul Craig Roberts was Assistant Secretary of the Treasury in the
Reagan administration. He is coauthor of The Tyranny of Good
Intentions.
----------------------------------------------------------------------------------------------------------

Anyone who mentions 'left' or 'lefties' twice in three paragraphs must
have hang-ups based on the typical American 'The Devil take the
hindmost' attitude, with little concern, if any, for other people!
Namely ones fellow Americans.

Doesn't the US Constitution say something about "Government for the
people, by the people ...... etc.".

Without that constitution; many countries have done and currently do a
much better job of looking after their citizens. Within each country
there will be, of course, the few who will in any society 'take
advantage' of such systems. And there is a cost to business and
members of the public within those countries for providing that
concern/care.

But in many of those countries notably in Europe, their societies work
and provide good care and services for their people/citizens.
Consequently they may have higher taxes and are more expensive to live
in than the USA.

Somehow Americans have managed to take the words 'Socialist' and 'Left
wing' and make them into something equivalent to 'Commie', or
'Terrorist' in an almost Joseph MacCarthy (1950s) manner! It's hard to
understand why! And apply them to any society that does not operate in
the US manner.

In an opposing argument outsiders to the USA could perhaps (of the
last eight years at least) say 'Interfering', 'Aggressive', 'Right
wing', 'Politically dominated by military and religious right wing',
'Poor/unregulated financial services', 'Government heavily influenced
by self interest lobbyists', 'Poor public services'!

Think about it folks before we stick labels on those who are not as
'conservative' or traditional. At this juncture it quite obvious that
'The traditional way' has only worked for a few. It has NOT worked for
many of the US citizenry who now find themselves without jobs, a
declining economy, high debt, government (that means us taxpayers)
bailouts of failing big business, high fuel prices etc. Also a general
lack of world wide respect for the USA.

God 'bless' .........(no cross that out!) ....... er 'save' America?

On 1/22/2009 11:36 PM terry spake thus:

The OP David, wrote:

Just read an excellent piece on the second wave of the economic
crisis that's about to hit us, and what should be done about it.
Article athttp://counterpunch.org/roberts01222009.html.

A note on the source: Counterpunch is the decidedly left-wing soapbox
of one of my favorite commentators, Alex Cockburn. However, unlike
most on the left, he brings in a wide range of points of view, many
of which surprisingly coincide with his own.

For those who object to the opinions of lefties, a word on the author
of this piece: from the mini-bio at the end of the article:

Paul Craig Roberts was Assistant Secretary of the Treasury in the
Reagan administration. He is coauthor of The Tyranny of Good
Intentions.
----------------------------------------------------------------------------------------------------------

Anyone who mentions 'left' or 'lefties' twice in three paragraphs must
have hang-ups based on the typical American 'The Devil take the
hindmost' attitude, with little concern, if any, for other people!
Namely ones fellow Americans.

Just a small point: you must have missed where I said that Alex Cockburn
(an unabashed leftist) is one of my favorite writers. I may have been
making too much of a disclaimer there, because of the decidedly
anti-left sentiment of this newsgroup in general.

Your other comments were pretty good, if a bit rambling.


--
"I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson

On Jan 22, 5:31*pm, David Nebenzahl wrote:
On 1/22/2009 1:24 PM spake thus:

On Jan 22, 2:29 pm, David Nebenzahl wrote

* [quoting from an article]:



This unrealistic approach to a serious crisis indicates a leadership
crisis on top of an economic crisis.

Does that include Obama too? *I thought he was the savior bringing
change?

Your apparent knee-jerk hatred of anything to the left of Karl Rove has
apparently eroded your reading comprehension. Try re-reading the
article, especially the part where Roberts mentions Obama.

--

Look, the imbecile who wrote that article knows less than zero about
economics. Suggesting that the solution to the present crisis is to
RAISE interest rates and REDUCE the deficit is completely contrary to
everything known about macro-economics. Any sane economist would
tell you so, from Keynes, Samuelson, Greenspan, take your pic. You'd
also learn it in a freshman course in economics and if you took such a
course, you'd stop embarrasing yourself by posting such rubbish.

On another note, how did you like the response Obama got from those
peace loving Hamas friends or yours? Obama made a statement that the
Palestinians must stop firing rockets at Israel and Israel must
complete it's troop withdrawl from Gaza. Seems pretty reasonable to
me. The response from Hamas was swift. They said Obama is
following Bush and is destined to another 4 years of failure in the
Middle East. That despite the fact that Obama spent the last year
going out of his way to try to be nice to them and kiss their
asses. Gee, what a swell bunch of reasonable, decent, peace loving
folks.

wrote:

On another note, how did you like the response Obama got from those
peace loving Hamas friends or yours? Obama made a statement that the
Palestinians must stop firing rockets at Israel and Israel must
complete it's troop withdrawl from Gaza. Seems pretty reasonable to
me. The response from Hamas was swift. They said Obama is
following Bush and is destined to another 4 years of failure in the
Middle East. That despite the fact that Obama spent the last year
going out of his way to try to be nice to them and kiss their
asses. Gee, what a swell bunch of reasonable, decent, peace loving
folks.

He's trying.

His very first call to a foreign leader as president was to a dude named
Mahmoud. Three of his first four calls were to tacit supporters of
terrorists (Palestinian Authority, presidents of Syria and Egypt).
Evidently, the line to Hamas was "Not a working number."

On 1/23/2009 7:42 AM HeyBub spake thus:

wrote:

On another note, how did you like the response Obama got from those
peace loving Hamas friends or yours? Obama made a statement that the
Palestinians must stop firing rockets at Israel and Israel must
complete it's troop withdrawl from Gaza. Seems pretty reasonable to
me. The response from Hamas was swift. They said Obama is
following Bush and is destined to another 4 years of failure in the
Middle East. That despite the fact that Obama spent the last year
going out of his way to try to be nice to them and kiss their
asses. Gee, what a swell bunch of reasonable, decent, peace loving
folks.

He's trying.

His very first call to a foreign leader as president was to a dude named
Mahmoud.

Good god, your ignorance is breathtaking, just spectacular.

You're talking about Mahmoud Abbas, the head of the Palestinian
Authority. Abbas is Israel's (and the US's) lapdog, the anti-Hamas,
"moderate" statesman that Israel will talk with, as opposed to the
democratically-elected actual government of Palestine, which is Hamas.

But I guess 'round heah', all you gotta do is throw out some Arab's name
and everyone just nods their heads and agrees that he must be a "turrist".

Bunch of ****ing idiots, the lot of you.


--
"I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson

David Nebenzahl wrote:
On 1/23/2009 7:42 AM HeyBub spake thus:

wrote:

On another note, how did you like the response Obama got from those
peace loving Hamas friends or yours? Obama made a statement that
the Palestinians must stop firing rockets at Israel and Israel must
complete it's troop withdrawl from Gaza. Seems pretty reasonable
to me. The response from Hamas was swift. They said Obama is
following Bush and is destined to another 4 years of failure in the
Middle East. That despite the fact that Obama spent the last year
going out of his way to try to be nice to them and kiss their
asses. Gee, what a swell bunch of reasonable, decent, peace
loving folks.

He's trying.

His very first call to a foreign leader as president was to a dude
named Mahmoud.

Good god, your ignorance is breathtaking, just spectacular.

You're talking about Mahmoud Abbas, the head of the Palestinian
Authority. Abbas is Israel's (and the US's) lapdog, the anti-Hamas,
"moderate" statesman that Israel will talk with, as opposed to the
democratically-elected actual government of Palestine, which is Hamas.

But I guess 'round heah', all you gotta do is throw out some Arab's
name and everyone just nods their heads and agrees that he must be a
"turrist".
Bunch of ****ing idiots, the lot of you.

I don't know what you're getting all exercised about! I was trying to give
the president all the credit he deserves. The president has said over and
over that he will negotiate with anybody and I take that to mean 'turrists"
(but possibly not Republicans).

Further, I made no representations as to my opinions, I merely echoed what
the news organizations are reporting - I don't have a bigoted bone in my
body! Heck, some of my best friends live next door to Mohammadens.

On 1/23/2009 11:55 AM HeyBub spake thus:

David Nebenzahl wrote:
On 1/23/2009 7:42 AM HeyBub spake thus:

wrote:

On another note, how did you like the response Obama got from those
peace loving Hamas friends or yours? Obama made a statement that
the Palestinians must stop firing rockets at Israel and Israel must
complete it's troop withdrawl from Gaza. Seems pretty reasonable
to me. The response from Hamas was swift. They said Obama is
following Bush and is destined to another 4 years of failure in the
Middle East. That despite the fact that Obama spent the last year
going out of his way to try to be nice to them and kiss their
asses. Gee, what a swell bunch of reasonable, decent, peace
loving folks.

He's trying.

His very first call to a foreign leader as president was to a dude
named Mahmoud.

Good god, your ignorance is breathtaking, just spectacular.

You're talking about Mahmoud Abbas, the head of the Palestinian
Authority. Abbas is Israel's (and the US's) lapdog, the anti-Hamas,
"moderate" statesman that Israel will talk with, as opposed to the
democratically-elected actual government of Palestine, which is Hamas.

But I guess 'round heah', all you gotta do is throw out some Arab's
name and everyone just nods their heads and agrees that he must be a
"turrist".
Bunch of ****ing idiots, the lot of you.

I don't know what you're getting all exercised about! I was trying to give
the president all the credit he deserves. The president has said over and
over that he will negotiate with anybody and I take that to mean 'turrists"
(but possibly not Republicans).

Just for the record here, I fully expect Obama to be every bit as much a
disaster for the Palestinians (meaning that he will utterly fail to
resolve the "Middle East crisis") as any of his predecessors. His
appointment of Dennis Ross practically guarantees that. (His appointment
of George Mitchell as envoy to Israel/Palestine is encouraging, but I
doubt that Mitchell will be given enough slack in his leash to
accomplish his nearly-impossible self-imposed task.)


--
"I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson

On Jan 23, 3:08*pm, David Nebenzahl wrote:
On 1/23/2009 11:55 AM HeyBub spake thus:





David Nebenzahl wrote:
On 1/23/2009 7:42 AM HeyBub spake thus:

wrote:

On another note, how did you like the response Obama got from those
peace loving Hamas friends or yours? * Obama made a statement that
the Palestinians must stop firing rockets at Israel and Israel must
complete it's troop withdrawl from Gaza. * *Seems pretty reasonable
to me. * *The response from Hamas was swift. * They said Obama is
following Bush and is destined to another 4 years of failure in the
Middle East. * *That despite the fact that Obama spent the last year
going out of his way to try to be nice to them and kiss their
asses. * *Gee, what a swell bunch of reasonable, decent, peace
loving folks.

He's trying.

His very first call to a foreign leader as president was to a dude
named Mahmoud.

Good god, your ignorance is breathtaking, just spectacular.

You're talking about Mahmoud Abbas, the head of the Palestinian
Authority. Abbas is Israel's (and the US's) lapdog, the anti-Hamas,
"moderate" statesman that Israel will talk with, as opposed to the
democratically-elected actual government of Palestine, which is Hamas.

But I guess 'round heah', all you gotta do is throw out some Arab's
name and everyone just nods their heads and agrees that he must be a
"turrist".
Bunch of ****ing idiots, the lot of you.

I don't know what you're getting all exercised about! I was trying to give
the president all the credit he deserves. The president has said over and
over that he will negotiate with anybody and I take that to mean 'turrists"
(but possibly not Republicans).

Just for the record here, I fully expect Obama to be every bit as much a
disaster for the Palestinians (meaning that he will utterly fail to
resolve the "Middle East crisis") as any of his predecessors.

The biggest disaster for the Palestinians is the Palestinians
themselves. They had an opportunity to choose reasonable leaders.
Instead they chose Hamas, a terrorist puppet of Iran, as their
government.

And as the latest example of who's reasonable and who's nuts, I gave
you the response Hamas blasted at Obama. Obama made a statement that
the Palestinians need to stop launching rockets at Israel and Israel
needs to complete their troop withdrawl from Gaza. Perfectly
reasonable. And Hamas' response to the new president, who at best
has kissed their asses for the last year and at worst has done nothing
to them? They told him he's following Bush and destined to failure
in the Middle East. Swell bunch of reasonable folks, who will take
every opportunity to incite their people to violence instead of
seeking opportunities for peace. You have as much chance at reasoning
with them as with Charlie Manson or Idi Amin.





His
appointment of Dennis Ross practically guarantees that. (His appointment
of George Mitchell as envoy to Israel/Palestine is encouraging, but I
doubt that Mitchell will be given enough slack in his leash to
accomplish his nearly-impossible self-imposed task.)

--
* "I know I will go to hell, because I pardoned Richard Nixon."

- Former President Gerald Ford to his golf partners, as related by
the late Hunter S. Thompson- Hide quoted text -

- Show quoted text -

David Nebenzahl wrote:

I don't know what you're getting all exercised about! I was trying
to give the president all the credit he deserves. The president has
said over and over that he will negotiate with anybody and I take
that to mean 'turrists" (but possibly not Republicans).

Just for the record here, I fully expect Obama to be every bit as
much a disaster for the Palestinians (meaning that he will utterly
fail to resolve the "Middle East crisis") as any of his predecessors.

Not that there's anything wrong with that... We'll still get high marks for
trying, and our reputation in the world is what counts.

His appointment of Dennis Ross practically guarantees that.

I dunno. Dennis Ross is a brilliant and thoughtful emissary. I can tell that
because he appears on Fox News from time to time.


(His
appointment of George Mitchell as envoy to Israel/Palestine is
encouraging, but I doubt that Mitchell will be given enough slack in
his leash to accomplish his nearly-impossible self-imposed task.)

Mitchell solved the Irish problem. Or they got tired of fighting, I forget
which.

On Fri, 23 Jan 2009 16:00:38 -0600, "HeyBub"
wrote:

David Nebenzahl wrote:

I don't know what you're getting all exercised about! I was trying
to give the president all the credit he deserves. The president has
said over and over that he will negotiate with anybody and I take
that to mean 'turrists" (but possibly not Republicans).

Just for the record here, I fully expect Obama to be every bit as
much a disaster for the Palestinians (meaning that he will utterly
fail to resolve the "Middle East crisis") as any of his predecessors.

Not that there's anything wrong with that... We'll still get high marks for
trying, and our reputation in the world is what counts.

His appointment of Dennis Ross practically guarantees that.

I dunno. Dennis Ross is a brilliant and thoughtful emissary. I can tell that
because he appears on Fox News from time to time.


(His
appointment of George Mitchell as envoy to Israel/Palestine is
encouraging, but I doubt that Mitchell will be given enough slack in
his leash to accomplish his nearly-impossible self-imposed task.)

Mitchell solved the Irish problem. Or they got tired of fighting, I forget
which.

You can't "solve" a problem involving Hamas. They have stated
repeatedly, on the Web and in other media, what their objective is.

Destruction of Israel.

They have zero interest in creating a Palestinian state.

The poor wretches in Gaza would LOVE to get these religious
maniacs off their backs. They bitterly regret having voted Hamas in as
hoped-for contrast with Fatah's utter, total corruption. But nobody
dares speak out; it's worth your life to oppose killer Hamas..

BTW - Look up "hudna". It's their version of "truce". The purpose is
to gain a breathing space to re-arm. This goes back to their prophet,
Mohammed, who in the 7th century entered into a ten-year truce with an
enemy, and violated it two years later when he was ready for combat.

Israel comes off as suckers, because when they make a promise, like a
six-month truce, they keep it. Hamas, on the other hand, never
stopped firing rockets into Israel. Problem is, Israel waited too
long to do something about Hamas' phony "truce". This rocket fire
has been going on for YEARS, while the biased media
weeps & wails about the poor Palestinians.

What would YOU do if an enemy who had sworn to destroy
you kept firing rockets into your homes and schools (yes, schools!)
driving you and your family into near breakdowns from fear; living
with a 15-SECOND window to get themselves and their children
to a shelter when the alarm sounds.

Honest answers only, please.

Same thing after 1967. Five Arab armies attacked Israel, encouraging
Palestinians to flee -- promising they could return in a few weeks and
take over the Jews' properties. Well, it didn't quite work out that
way. So the rich Arab countries deliberately let them stew
in "refugee camps" -- perfect breeding grounds for several
generations of terrorists.

BTW - did you notice any aid flowing from the rich Arab countries
to the suffering Gazans? Of course not! Leaving them in their misery
makes such priceless anti-Israel propaganda. But plenty of
munitions (as well as drugs and prostitutes) smuggled from
hypocritical Egypt via the tunnels, and even attempts to bring in
Iranian munitions by sea.

On Thu, 22 Jan 2009 20:18:05 -0800 (PST), REO Guy
wrote:

As a real estate investor and rental owner, I would urge people NOT to
sell their homes or rental units, no matter what, because the selling
frenzy (as we've seen on Wall St.) is just making things worse.
Instead, trim back on buying all those things you don't need: new
shoes, matching candle sets, cute little salt shakers, etc.
Good luck everyone,
Brian
http://www.ezlandlordforms.com/documents/

I'm not in that situation, but I can empathize with people who
are facing real, terrible problems. It's somewhat patronizing
to equate cutting down with "new shoes, matching candle sets,
cute little salt shakers".

How about medical premiums and/or out-of-pocket medical costs,
car payments/repairs, children's tuition, even nutritious food as
opposed to poisonous fast-food!

People out there are suffering. Have some compassion rather
than ridiculing them!

Fortner

terry wrote:


Doesn't the US Constitution say something about "Government for the
people, by the people ...... etc.".

No. That's from Lincoln's Gettysburg Address. When was the last time you read
the US Constitution? It's a worthwhile exercise every few years. Doesn't take
long, it is an impressively short document for what it is.

-- Doug

In article ,
Douglas Johnson wrote:

terry wrote:


Doesn't the US Constitution say something about "Government for the
people, by the people ...... etc.".

No. That's from Lincoln's Gettysburg Address. When was the last time you
read
the US Constitution? It's a worthwhile exercise every few years. Doesn't
take
long, it is an impressively short document for what it is.

-- Doug

The U.S. Constitution is less than a quarter the length of the owner's
manual for a 1998 Toyota Camry, and yet it has managed to keep 300
million of the world's most unruly, passionate and energetic people
safe, prosperous and free.

P. J. O'Rourke

Lets try separating that URL so it might work.

--
Christopher A. Young
Learn more about Jesus
www.lds.org
..


"David Nebenzahl" wrote in message
s.com...
Just read an excellent piece on the second wave of the
economic crisis
that's about to hit us, and what should be done about it.
Article
at
http://counterpunch.org/roberts01222009.html.

A note on the source: Counterpunch is the decidedly
left-wing soapbox of
one of my favorite commentators, Alex Cockburn. However,
unlike most on
the left, he brings in a wide range of points of view, many
of which
surprisingly coincide with his own.

For those who object to the opinions of lefties, a word on
the author of
this piece: from the mini-bio at the end of the article:

Paul Craig Roberts was Assistant Secretary of the
Treasury in the
Reagan administration. He is coauthor of The Tyranny of
Good Intentions.


================================================== =====================

Another Real Estate Crisis is About to Hit

By PAUL CRAIG ROBERTS

For a picture of the US real estate crisis, imagine New
Orleans wrecked
by Hurricane Katrina, and before the waters even begin to
recede, a
second Katrina hits.

The 1,120,000 lost US retail jobs in 2008 are a signal that
the second
stage of the real estate bust is about to hit the economy.
This time it
will be commercial real estate--shopping malls, strip malls,
warehouses,
and office buildings. As businesses close and rents decline,
the ability
to service the mortgages on the over-built commercial real
estate
disappears.

The over-building was helped along by the irresponsibly low
interest
rates, but the main impetus came from the slide of the US
saving rate to
zero and the rise in household indebtedness. The shrinkage
of savings
and the increase in debt raised consumer spending to 72% of
GDP. The
proliferation of malls and the warehouses that service them
reflect the
rise in consumer spending as a share of GDP.

Like the federal government, consumers spent more than they
earned and
borrowed to cover the difference. Obviously, this could not
go on
forever, and consumer debt has reached its limit.

Shopping malls are losing anchor stores, and large chains
are closing
stores and even going out of business altogether. Developers
who
borrowed to finance commercial ventures are in trouble as
are the
holders of the mortgages, derivatives and other financial
junk
associated with the loans.

The main source of the economic crisis is the infantile
belief of US
policymakers that an economy could be based on debt
expansion. As
offshoring moved jobs, incomes, and GDP out of the country,
debt
expanded to take the place of the missing income. When the
offshored
goods and services were brought back to be sold to
Americans, the trade
deficit rose, adding another level of financing for an
economy that
consumes more than it produces.

The growth of debt has outpaced the growth of real output.
Yet, the
solution offered by Obama’s economic team is to expand debt
further.
This is not surprising as Obama’s economic team consists of
the very
people who brought on the debt crisis. Now they are going to
make it worse.

The unexamined question is: Who is going to finance the next
wave of debt?

The US budget deficit for fiscal year 2009 already appears
to be on a
path to $2 trillion, and that is before Obama’s stimulus
program. What
we are looking at is a $3 trillion budget deficit if Obama’s
program is
enacted in time to impact the economy this year.

Foreign countries can finance a $500 billion US budget
deficit out of
their trade surpluses with the US. But foreigners do not
have the funds
to finance a US budget deficit in the trillions of dollars,
and they
would not finance such a deficit even if they had the funds.
Foreigners
are over-weighted in dollar holdings and prefer to lighten
their holding
than to add to them. America’s economic prospects are dim as
are the
dollar’s prospects as reserve currency. An annual budget
deficit in the
trillions of dollars makes the dollar’s prospects appear
even dimmer.

The federal government’s likely solution to the debt problem
will be to
monetize the debt, that is, the government will finance its
deficit by
printing money. Debt will be inflated away. But for those
Americans
without jobs or whose incomes do not rise with inflation,
life will be
cruel.

Life is already cruel for Americans living on retirement
savings. Not
only has the stock market bust reduced their wealth by half,
but also
their remaining assets are producing no income. Interest
rates are so
low that debt instruments produce no income, and there are
scant capital
gains in the stock market. Retirees are living by consuming
their capital.

America’s economic policy of low interest rates and debt
expansion bodes
ill for everyone living off their savings. Their future
prospects are
even worse as high inflation will destroy the value of their
savings,
especially if held in cash or debt instruments, including
“safe” US
Treasuries.

There are more intelligent ways to try to escape from the
current
crisis. However, the financial gangsters and their shills
that Obama has
put in charge of economic policy are thinking only of their
own
interest. What happens to the American people is not a
concern.

A compassionate government would handle the crisis in this
way:

The trillions of dollars in credit default swaps (CDS)
should be
declared null and void. These “swaps” are simply bets that
financial
instruments and companies will fail, and the bulk of the
bets are made
by people and institutions that do not hold the financial
instruments or
shares in the companies. The ideology that financial markets
were
self-regulating allowed illegal gambling free rein. There is
no reason
under the sun for taxpayers to bail out gamblers.

The bailout money, instead of being given to favored
financial
institutions to finance their acquisition of other
institutions, should
be used to refinance the defaulting mortgages. This would
slow, if not
stop, the growing inventory of foreclosed properties that is
driving
down home prices.

The mark-to-market rule should be suspended until the real
values of the
troubled properties and instruments can be determined.
Suspension of the
rule would prevent the failure of sound institutions and
lessen the need
for a bailout.

Interest rates have to be raised in order to encourage
saving and to
provide incomes to retirees.

To preserve the dollar’s status as reserve currency, a
credible policy
of reducing both budget and trade deficits must be
announced. In the
near term the budget deficit can be reduced by $500 billion
by
withdrawing from Iraq and Afghanistan and by cutting a
bloated defense
budget that represents the now unattainable goal of US world
hegemony.

The trade deficit can be significantly reduced by bringing
offshored
jobs back to America. One way to do this is to tax
corporations
according to the value added to their output that occurs in
the US.
Corporations that produce their products for US markets
abroad would
have high tax rates; those that produce domestically would
have low tax
rates.

This approach to the economic crisis stands in marked
contrast with the
approach of the gangsters running US economic policy. The
gangsters are
using the crisis as an opportunity to steal from taxpayers
and to
finance their misdeeds and exorbitant salaries with Federal
Reserve
loans. Their shills among economists and the financial press
tell the
people that the solution is to fatten up the banks with
funds so they
will resume lending to an over-indebted public that will
then return to
the shopping malls.

This unrealistic approach to a serious crisis indicates a
leadership
crisis on top of an economic crisis.

================================================== ========================
Paul Craig Roberts was Assistant Secretary of the Treasury
in the Reagan
administration. He is coauthor of The Tyranny of Good
Intentions. He can
be reached at: .


--
"I know I will go to hell, because I pardoned Richard
Nixon."

- Former President Gerald Ford to his golf partners, as
related by
the late Hunter S. Thompson

David Nebenzahl wrote:
Just read an excellent piece on the second wave of the economic crisis
that's about to hit us, and what should be done about it. Article
athttp://counterpunch.org/roberts01222009.html.

A note on the source: Counterpunch is the decidedly left-wing soapbox of
one of my favorite commentators, Alex Cockburn. However, unlike most on
the left, he brings in a wide range of points of view, many of which
surprisingly coincide with his own.

For those who object to the opinions of lefties, a word on the author of
this piece: from the mini-bio at the end of the article:

Paul Craig Roberts was Assistant Secretary of the Treasury in the
Reagan administration. He is coauthor of The Tyranny of Good Intentions.


================================================== =====================

Another Real Estate Crisis is About to Hit

By PAUL CRAIG ROBERTS

For a picture of the US real estate crisis, imagine New Orleans wrecked
by Hurricane Katrina, and before the waters even begin to recede, a
second Katrina hits.

The 1,120,000 lost US retail jobs in 2008 are a signal that the second
stage of the real estate bust is about to hit the economy. This time it
will be commercial real estate--shopping malls, strip malls, warehouses,
and office buildings. As businesses close and rents decline, the ability
to service the mortgages on the over-built commercial real estate
disappears.

The over-building was helped along by the irresponsibly low interest
rates, but the main impetus came from the slide of the US saving rate to
zero and the rise in household indebtedness. The shrinkage of savings
and the increase in debt raised consumer spending to 72% of GDP. The
proliferation of malls and the warehouses that service them reflect the
rise in consumer spending as a share of GDP.

Like the federal government, consumers spent more than they earned and
borrowed to cover the difference. Obviously, this could not go on
forever, and consumer debt has reached its limit.

Shopping malls are losing anchor stores, and large chains are closing
stores and even going out of business altogether. Developers who
borrowed to finance commercial ventures are in trouble as are the
holders of the mortgages, derivatives and other financial junk
associated with the loans.

The main source of the economic crisis is the infantile belief of US
policymakers that an economy could be based on debt expansion. As
offshoring moved jobs, incomes, and GDP out of the country, debt
expanded to take the place of the missing income. When the offshored
goods and services were brought back to be sold to Americans, the trade
deficit rose, adding another level of financing for an economy that
consumes more than it produces.

The growth of debt has outpaced the growth of real output. Yet, the
solution offered by Obama’s economic team is to expand debt further.
This is not surprising as Obama’s economic team consists of the very
people who brought on the debt crisis. Now they are going to make it worse.

The unexamined question is: Who is going to finance the next wave of debt?

The US budget deficit for fiscal year 2009 already appears to be on a
path to $2 trillion, and that is before Obama’s stimulus program. What
we are looking at is a $3 trillion budget deficit if Obama’s program is
enacted in time to impact the economy this year.

Foreign countries can finance a $500 billion US budget deficit out of
their trade surpluses with the US. But foreigners do not have the funds
to finance a US budget deficit in the trillions of dollars, and they
would not finance such a deficit even if they had the funds. Foreigners
are over-weighted in dollar holdings and prefer to lighten their holding
than to add to them. America’s economic prospects are dim as are the
dollar’s prospects as reserve currency. An annual budget deficit in the
trillions of dollars makes the dollar’s prospects appear even dimmer.

The federal government’s likely solution to the debt problem will be to
monetize the debt, that is, the government will finance its deficit by
printing money. Debt will be inflated away. But for those Americans
without jobs or whose incomes do not rise with inflation, life will be
cruel.

Life is already cruel for Americans living on retirement savings. Not
only has the stock market bust reduced their wealth by half, but also
their remaining assets are producing no income. Interest rates are so
low that debt instruments produce no income, and there are scant capital
gains in the stock market. Retirees are living by consuming their capital.

America’s economic policy of low interest rates and debt expansion bodes
ill for everyone living off their savings. Their future prospects are
even worse as high inflation will destroy the value of their savings,
especially if held in cash or debt instruments, including “safe” US
Treasuries.

There are more intelligent ways to try to escape from the current
crisis. However, the financial gangsters and their shills that Obama has
put in charge of economic policy are thinking only of their own
interest. What happens to the American people is not a concern.

A compassionate government would handle the crisis in this way:

The trillions of dollars in credit default swaps (CDS) should be
declared null and void. These “swaps” are simply bets that financial
instruments and companies will fail, and the bulk of the bets are made
by people and institutions that do not hold the financial instruments or
shares in the companies. The ideology that financial markets were
self-regulating allowed illegal gambling free rein. There is no reason
under the sun for taxpayers to bail out gamblers.

The bailout money, instead of being given to favored financial
institutions to finance their acquisition of other institutions, should
be used to refinance the defaulting mortgages. This would slow, if not
stop, the growing inventory of foreclosed properties that is driving
down home prices.

The mark-to-market rule should be suspended until the real values of the
troubled properties and instruments can be determined. Suspension of the
rule would prevent the failure of sound institutions and lessen the need
for a bailout.

Interest rates have to be raised in order to encourage saving and to
provide incomes to retirees.

To preserve the dollar’s status as reserve currency, a credible policy
of reducing both budget and trade deficits must be announced. In the
near term the budget deficit can be reduced by $500 billion by
withdrawing from Iraq and Afghanistan and by cutting a bloated defense
budget that represents the now unattainable goal of US world hegemony.

The trade deficit can be significantly reduced by bringing offshored
jobs back to America. One way to do this is to tax corporations
according to the value added to their output that occurs in the US.
Corporations that produce their products for US markets abroad would
have high tax rates; those that produce domestically would have low tax
rates.

This approach to the economic crisis stands in marked contrast with the
approach of the gangsters running US economic policy. The gangsters are
using the crisis as an opportunity to steal from taxpayers and to
finance their misdeeds and exorbitant salaries with Federal Reserve
loans. Their shills among economists and the financial press tell the
people that the solution is to fatten up the banks with funds so they
will resume lending to an over-indebted public that will then return to
the shopping malls.

This unrealistic approach to a serious crisis indicates a leadership
crisis on top of an economic crisis.

================================================== ========================
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan
administration. He is coauthor of The Tyranny of Good Intentions. He can
be reached at: .


Hmmm,
No empire lasts forever!!

On 1/24/2009 10:40 AM Tony Hwang spake thus:

David Nebenzahl wrote:

[snip]

Hmmm,
No empire lasts forever!!

Again, I ask; was it *really* necessary to quote the entire damn message
to add a 2-line reply?

Sheesh. People like you give bottom-posting a bad rap.


--
Made From Pears: Pretty good chance that the product is at least
mostly pears.
Made With Pears: Pretty good chance that pears will be detectable in
the product.
Contains Pears: One pear seed per multiple tons of product.

(with apologies to Dorothy L. Sayers)

Kurt Ullman wrote:

The U.S. Constitution is less than a quarter the length of the owner's
manual for a 1998 Toyota Camry, and yet it has managed to keep 300
million of the world's most unruly, passionate and energetic people
safe, prosperous and free.

P. J. O'Rourke

"It" what? The Camry owner's manual or the Constitution?

On 1/24/2009 11:59 AM HeyBub spake thus:

Kurt Ullman wrote:

The U.S. Constitution is less than a quarter the length of the owner's
manual for a 1998 Toyota Camry, and yet it has managed to keep 300
million of the world's most unruly, passionate and energetic people
safe, prosperous and free.

P. J. O'Rourke

"It" what? The Camry owner's manual or the Constitution?

I'd vote for the Toyota manual. (Not that I don't love the Constitution,
but it's honored mostly in the breach, as they used to say.)


--
Made From Pears: Pretty good chance that the product is at least
mostly pears.
Made With Pears: Pretty good chance that pears will be detectable in
the product.
Contains Pears: One pear seed per multiple tons of product.

(with apologies to Dorothy L. Sayers)

Douglas Johnson wrote in
:

terry wrote:


Doesn't the US Constitution say something about "Government for the
people, by the people ...... etc.".

No. That's from Lincoln's Gettysburg Address. When was the last time
you read the US Constitution? It's a worthwhile exercise every few
years. Doesn't take long, it is an impressively short document for
what it is.

-- Doug


I wish US CONGRESScritters would read the Constitution,every year.
Then I wish they would FOLLOW it.

--
Jim Yanik
jyanik
at
kua.net

Kurt Ullman wrote in
:

In article ,
Douglas Johnson wrote:

terry wrote:


Doesn't the US Constitution say something about "Government for the
people, by the people ...... etc.".

No. That's from Lincoln's Gettysburg Address. When was the last
time you read
the US Constitution? It's a worthwhile exercise every few years.
Doesn't take
long, it is an impressively short document for what it is.

-- Doug

The U.S. Constitution is less than a quarter the length of the owner's
manual for a 1998 Toyota Camry, and yet it has managed to keep 300
million of the world's most unruly, passionate and energetic people
safe, prosperous and free.

P. J. O'Rourke


Well,we're slowly sliding away from that freedom,thanks to the socialists.

--
Jim Yanik
jyanik
at
kua.net

Jim Yanik wrote:
Kurt Ullman wrote in
:

In article ,
Douglas Johnson wrote:

terry wrote:


Doesn't the US Constitution say something about "Government for the
people, by the people ...... etc.".
No. That's from Lincoln's Gettysburg Address. When was the last
time you read
the US Constitution? It's a worthwhile exercise every few years.
Doesn't take
long, it is an impressively short document for what it is.

-- Doug
The U.S. Constitution is less than a quarter the length of the owner's
manual for a 1998 Toyota Camry, and yet it has managed to keep 300
million of the world's most unruly, passionate and energetic people
safe, prosperous and free.

P. J. O'Rourke


Well,we're slowly sliding away from that freedom,thanks to the socialists.


Be fair, the neocons have done as much if not more to take away our
freedoms and rights as anyone else.

nate

--
replace "roosters" with "cox" to reply.
http://members.cox.net/njnagel

Nate Nagel wrote:

Well,we're slowly sliding away from that freedom,thanks to the
socialists.

Be fair, the neocons have done as much if not more to take away our
freedoms and rights as anyone else.


"Neocons" are really most interested in foreign policy - they do, however,
take away the freedoms of foreigners. With some relish.

Jim Yanik wrote:



I wish US CONGRESScritters would read the Constitution,every year.
Then I wish they would FOLLOW it.

The Constitution is like the Bible - it doesn't matter what it says. The
only thing that counts is what it means.

Sometimes the Constitution or Bible do not mean what they say and sometimes
they do not say what they mean.

On Jan 24, 2:31*pm, David Nebenzahl wrote:
On 1/24/2009 10:40 AM Tony Hwang spake thus:

David Nebenzahl wrote:

[snip]

Hmmm,
No empire lasts forever!!

Again, I ask; was it *really* necessary to quote the entire damn message
to add a 2-line reply?


Sheesh. People like you give bottom-posting a bad rap.


Doesn't anything make you happy? I would think you'd enjoy seeing
the entire message re-posted so more people could read the rubbish you
posted from an obvious economic illiterate.





--
Made From Pears: Pretty good chance that the product is at least
mostly pears.
Made With Pears: Pretty good chance that pears will be detectable in
the product.
Contains Pears: *One pear seed per multiple tons of product.

(with apologies to Dorothy L. Sayers)

IF IT DOES GET WORSE, I DONT THINK ANYONE HERE WILL HAVE AN ANSWER OR
BE LISTENED TO BY THE PEOPLE IN POWER .. BEST THING YOU CAN DO IS TAKE
CARE OF YOUR FAMILY AND FORGET THE BIG PICTURE...

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