Paul Craig Roberts on US' $tatu$ (Weimar Republic)

[Mort Zuckerman]

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Subject: [SpinLyme] Paul Craig Roberts on US' $tatu$

Date: Nov 13, 2008 7:01 AM

[ARTICLE BELOW]
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The only things possible to do are for the TOWNS to create their own
whatever.

'The reverse of globalization. The Town Fathers, in every town across
America
are going to have to find a way to first establish a local energy
supply. Then
Town-greenhouses...

The reverse of globalization. All towns need to be as independent as
possible.

For capital, loans from foreign governments (I'm serious about selling
Alaska
back to Russia).

Scrap metal should be converted locally instead of shipped to Japan.

NEVER sell our hard-dug natural resources to other nations. If it
came out
of OUR SOIL, it belongs to us. That includes oil, and even off-shore
oil. The
Bigs have made their money. And we all know what they did with it-
they tried
to make even more money with these wars-for-oil-and-resources called
the War
on Terror, and the Home-Ownership campaign of the Bushies and
Greenberg. Some
say this was a deliberate scheme to completely impoverish the already-
poor.

Several years ago I attempted to reach the Town Fathers locally. I
went to
the Stonington
http://www.stonington-ct.gov/Pages/index
Democratic Town Committee meetings and spoke about energy- YEARS AGO.
I was
met with a Republican BigOil plant (a phoney Democrat who was actually
employed
by BigOil) who ***tried to shout me down*** right in the middle of the
discourse.

Every time he bellowed, I laughed in disbelief. I finally asked him
to "step
outside with me" to finish the argument. He declined.


In other words, that fat-head fake-Democrat was only a fat-head loud-
mouth if
it was in front of other people... 'typical Republican burp-fart pig
and
fairy-ass-cowardly-puke. He refused to go outside with me to discuss
New
Energy - for the TOWN !! - one on one. He preferred to bellow with an
audience.


Whatever the Republicans suggest, do the opposite. Localization
instead of
Globalization. Loans are a problem for these new infrastructures.

It's true that the Weimar Republic commeth. One way to be prepared
for it is
for the local towns and the people get ready to barter without
currency.

IMMEDIATELY!!!

Kathleen M. Dickson
=========================================

http://www.opednews.com/articles/America-s-Economic-Crisis-by-Paul-Craig-Roberts-081112-201.html
Headlined on 11/12/08:
America's Economic Crisis Is Beyond The Reach of Traditional Solutions


By most accounts the US economy is in serious trouble. Robert Reich,
an adviser
to President-elect Obama, calls it a “mini-depression,” and that
designation might
be optimistic. The Russian economist, Mikhail Khazin says that the
“U.S. will soon
face a second ‘Great Depression.’” It is possible that even Khazin is
optimistic.

I cannot predict the future. However, I can explain what the problems
are, how
they differ from past times of troubles, and why traditional remedies,
such as the
public works programs that Reich proposes, are unlikely to succeed in
reviving the
U.S. economy.

Khazin points out, as have others such as University of Maryland
economist Herman
Daly and myself, that consumer debt expansion is the fuel that kept
the U.S. economy
alive. The growth of debt has outstripped the growth of income to
such an extent
that an increase in consumer credit and bank lending is not possible.
Consumers
are overburdened with debt. This fact takes monetary policy out of
the picture.
Americans can no longer afford to borrow more in order to consume
more.

This leaves economists with fiscal policy, which, as Reich realizes,
also has problems.
Reich is correct that neither a reduction in marginal tax rates nor a
tax rebate
is likely to be very effective. Reich, a Keynesian, has an uncertain
grasp of supply-side
economics, but as one who has a firm grasp, I can attest that marginal
tax rates
today are not the stifling influence they were prior to John F.
Kennedy and Ronald
Reagan. As Art Laffer said, there are two tax rates, high and low,
that will produce
the same tax revenues by expanding or contracting economic activity.
Marginal tax
rates are no longer in the higher ranges. As for a tax rebate, Reich
is correct
that in the present situation a tax rebate would be dissipated in
paying off creditors.

Reich sees the problem as a lack of aggregate demand sufficient to
maintain full
employment. His solution is for the government to spend “a lot” more
on infrastructure
projects on top of a trillion dollar budget deficit --”repairing roads
and bridges,
levees and ports; investing in light rail, electrical grids, new
sources of energy.”
This spending would boost employment, wages, and aggregate demand.

I have no opposition to infrastructure projects, but who will finance
the baseline
trillion dollar US budget deficit plus the additional red ink spending
on infrastructure?
Not Americans. The US savings rate is zero or negative. Home
mortgage foreclosures
are in the millions. Officially, US unemployment is 10 million, but
if measured
by pre-Clinton era standards unemployment is much higher.
Statistician John Williams,
who measures the unemployment rate by the pre-Clinton standards
concludes that the
rate of US unemployment is about 15 percent. President Clinton
“reformed” the unemployment
statistics by ceasing to count discouraged workers as unemployed.

For years, the US government’s budget has been dependent on foreigners
financing
the red ink. Countries such as Japan and China and OPEC suppliers of
oil to the
US have huge export surpluses with the US. They recycle the dollars
by buying US
Treasury bonds, thus financing the US government’s red ink budgets.

The open question is: how much longer will they do so?

Foreign portfolios are overweighed in dollar assets. Currently the
dollar’s value
is benefitting from the financial crisis, as investors flee to the
reserve currency.
However, sooner or later the huge outpourings of dollar debts will
cause foreign
creditors to draw back. Already China, America’s largest creditor,
has sent a signal
that that time might be drawing near. Recently the Chinese government
asked, as
they do indirectly through third parties, “Why should China help the
US to issue
debt without end in the belief that the national credit of the US can
expand without
limit?”

Is the rest of the world, which has demanded a financial summit to
work toward a
new financial order, going to permanently allocate the world’s supply
of capital
to covering American mistakes?

If not, the bailout and the stimulus package will have to be financed
by printing
money.
And the bailout needs are growing. Car loans and credit card debt
were also securitized
and sold. As the economy worsens, credit card and car loan defaults
are rising.
Moreover, AIG needs more money from the government. Fannie Mae’s loss
has widened
to $29 billion despite the $200 billion bailout. General Motors and
Ford need taxpayer
money to survive. General Motors says that its GMAÇ mortgage unit “may
not survive.”
Deutsche Bank sees General Motors shares “as likely worthless.”

Shades of the Weimar Republic.

What Reich and the American economic establishment do not understand
is that the
recession paradigm does not apply. There are no jobs waiting at US
manufacturers
for a demand stimulus to pull Americans back into work. The problem
is not a liquidity
problem. To the contrary, there have been many years of too much
liquidity. Credit
has grown far more than production. Indeed, US production has been
moved offshore.
Jobs that used to support the growth of American incomes and the tax
bases of cities
and states have moved, along with US GDP, to China and elsewhere.

The work is gone. All that are left are credit card and mortgage
debts.

Anyone who thinks that America still has a vibrant economy needs to
log onto www.EconomyInCrisis.org
and face the facts.

Economists associate economic depression with price deflation.
However, traditionally,
debts that are beyond an economy’s ability to service are inflated
away. This suggests
that the coming depression will be an inflationary depression.
Instead of falling
prices mitigating the effects of falling employment, higher prices
will go hand
in hand with rising unemployment--a situation worse than the Great
Depression.

The incompetent Clinton and Dubya administrations, unregulated
banksters and Wall
St criminals, greedy CEOs, and a no-think economics profession have
destroyed America’s
economy.

What is the remedy for simultaneous inflation and unemployment?

Three decades ago the solution was supply-side economics. Easy
monetary policy
had pushed up consumer demand, but high tax rates had curtailed
output. It was
more profitable for firms to allow prices to rise than for them to
invest and increase
output.
Supply-side economics changed the policy mix. Monetary policy was
tightened and
marginal tax rates were reduced, thus stimulating output instead of
inflation.

Today the problem is different. The US has abused the reserve
currency role, thus
endangering its credit worthiness and the exchange value of the
dollar. Jobs have
moved offshore. The budget deficit is huge and growing. If
foreigners will not
finance the widening gap, the printing presses will be employed or the
government
will not be able to pay its bills.

The bailout funds have been wasted. The expensive bailout does not
address the problem
of falling employment and rising mortgage defaults. Treasury
Secretary Hank Paulson
could not see beyond saving Goldman Sachs and his bankster friends.
The Paulson
bailout does nothing except take troubled assets off banks’ books and
put them on
the overburdened taxpayers’ books, thus endangering the US Treasury’s
credit rating.

What the Bush Regime has done is to stick the taxpayers with the
banks’ mistakes.
An intelligent government would have used the money to refinance the
troubled mortgages
and stop the defaults. By saving the mortgages from default, the
banks’ balance
sheets would have been made secure. By failing to deal with the
subprime crisis,
Bush and Congress have added a financial crisis to the exhaustion of
consumer demand
and the problems of financing huge trade and budget deficits.

Belatedly, Paulson has realized his mistake. On November 12, Paulson
announced,
“We have continued to examine the relative benefits of purchasing
illiquid mortgage-related
assets. Our assessment at this time is that this is not the most
effective way
to use [bailout] funds.”

The financial crisis has cost taxpayers far more than the amount of
the bailout.
Americans’ savings and pension funds have been devastated. Americans
in investment
partnerships, who have been required by IRS rules to pay income taxes
on gains in
the partnerships’ portfolios, have had the accumulated multi-year
gains wiped out.
They have paid taxes on years of “capital gains” that have
disappeared, thus doubling
their losses.

America’s economic troubles will rapidly accumulate if the dollar
loses its reserve
currency role. To protect the dollar and the Treasury’s credit
standing, the US
needs to curtail its foreign borrowing by reducing its budget
deficit. It can do
this by halting its gratuitous wars and slashing its unnecessary
military spending
which exceeds that of the rest of the world combined. The empire has
run out of
resources, and the 700 overseas bases must be closed.

Can Americans afford massive infrastructure spending when they cannot
afford health
care? In Florida a Blue Cross Blue Shield group policy for a 60-year
old woman
costs $14,100 annually, and this is a policy with deductibles and co-
payments.
Supplementary policies from AARP to fill some of the gaps in Medicare
can cost retirees
$3,300 annually. When one looks at the economic situation of the vast
majority of
Americans, it is astonishing that the Bush regime regards wars in the
Middle East
and taxpayer bailouts of Wall Street criminals as a good use of scarce
resources.

US corporations, which have moved their production for US markets
offshore in order
to drive up their share prices and provide their CEOs with multi-
million dollar
bonuses, can be provided with a different set of incentives that
encourage the corporations
to bring employment back to the US. For example, the corporate income
tax can be
restructured to tax corporations according to the value-added in the
US. The higher
the value-added in the US, the lower the tax rate; the lower the value-
added, the
higher the tax rate.

Cutting the budget deficit by halting pointless wars and unnecessary
military spending
and reducing the trade deficit by bringing jobs back to America are
simple tasks
compared to confronting inflationary depression.

The world has had enough of American irresponsibility and is taking
away the reins.
At the November 15 economic summit, the world will begin the process
of imposing
a new financial order on the US in exchange for continued lending to
the bankrupt
“superpower.” With bailouts eating up the world’s supply of capital,
continued
foreign financing for Washington’s wars of aggression is out of the
picture



Paul Craig Roberts, a former Assistant Secretary of the US Treasury
and former associate
editor of the Wall Street Journal, has held numerous academic
appointments. He has
been reporting shocking cases of prosecutorial abuse for two decades.
A new edition
of his book, The Tyranny of Good Intentions, co-authored with Lawrence
Stratton,
a documented account of how Americans lost the protection of law, was
published
by Random House in March, 2008.

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