On Money and China

Via Joe Costello's new Archein blog, cross-posted here:
On Money and China

SIGTARP, the Special Inspector General for TARP, who is supposedly charged to make sure your tax dollars going to the banks aren't wasted, which is funny in itself, released their first report, which is a joke in itself. The report basically says the New York Fed under Mr. Geithner was basically played by the banks in the money paid through AIG. Of course, that's not really true, AIG was simply used to funnel money into the banks, that was without a doubt always the idea. Whether you think that was criminal or in the public interest, well it was criminal. Yves Smith has a longer take down.

Of course this all plays into the growing global currency hoedown. The debate about who is beggaring thy neighbor is growing louder. Marshall Auerback has a piece at ND 2.0 entitled, Should America Kowtow to China. It's an unfortunate title, though accurate for the piece's tone, nonetheless it has some interesting bits on monetary history and thought of the 20th century. China and US at this point are tied at the hip, like it or not. More importantly, it is has been Wall Street and American mega-corporations that have profited from the past two decades of Chinese industrialization as much as anyone. It's their model, I would argue, the Chinese have mistakenly adopted.
The talk of China as a "major power" is greatly misconstrued. It is a very unstable society at this point, which is par for the course historically for the process of industrialization. China still has 800 million people who are subsistence farmers, that's almost three times the population of the US. As far as industrial development, China is more in the position the US was in the 1930s and Franklin Roosevelt depreciated the dollar. Asking the Chinese now to raise the Yuan is to say the least problematic, as Gary Shilling points out over capacity is endemic and growing. China could be the next big leg down, and who knows what that will mean.

All the money the Fed has pumped into the banks, propping up the real estate market, zero interest rates, and deficits have let the markets play with the dollar. The dollar as reserve currency has in certain respects the role gold played back under the gold standard. The dollar standard is being undermined, but not simply by the moves of the Fed and treasury of the last two years, but just as much by our mega-corporations' and Wall Street's deindustrialization policies of the past four decades. The dollar still represents the largest manufacturing and military power on the globe, but it is a power much decreased from just three decades ago. We need to rethink the global financial system.

The United States has 5% of the world's population and we use 25% of the world's resources. If 2/3 of the Chinese used oil at the same per capita rate as the United States, there wouldn't be a drop for anyone else. This is unsustainable. The old order is shaking and we need to go through some serious restructuring both here and globally. A restructuring that is going to take some time. Why should the Chinese be exporting anything? 20th century industrial-market thinking is not going to get us anywhere. You can't have a Banana Republic financial system and then act like you can throw your weight around. If Americans want to stand up to somebody, lets start with Wall Street and our mega-corporations.

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Ben's Bet

Ben's Bet

I was recently reading some economic
material on Depression of the 30s trying to figure out what Ben's bet of the
dollar means for the global economy. I began to worry my memory was
faulty, an occurrence of greater frequency these days. However, on this
matter, it wasn't my memory. Instead, I discovered "revisionist
history" had occurred, and this makes me even more nervous about
Ben's bet.

The matter I researched was the "beggar thy neighbor" policies of the
30s, where countries enacted trade tariffs, import restrictions, and
currency depreciations in the fight against economic contraction. I
had understood currency depreciation to be an important aspect of
beggar thy neighbor policies. In the early 30s, a number of countries raced to
devalue their currencies for export advantage, only aggravating global
deflationary movements. However, I found Micheal Pettis, who has some interesting insights on China, had linked to a paper being touted by the National Bureau of Economic Research entitled, "The Roots of
Protectionism." The abstract states:

Thus, the 1930s' rush to protectionism was not so
much a triumph of special-interest politics as it was a result of second-best
macroeconomic policies, the authors write. Their study "suggests that
had more countries been willing to abandon the gold standard and use
monetary policy to counter the slump, fewer would have been driven to
impose trade restrictions."

So, there it was. As monetary theory ascended, history was rewritten or
revised accordingly. Currency depreciation moved from the "beggar thy
neighbor" problem column, onto the monetary solution part of the
ledger. So, I thought, "This is what wily old Ben is thinking." I went
and looked up Mr. Bernanke's "Essays on the Great Depression," and in chapter-three(page 78), Mr. Bernanke writes:

Eichengreen and Sachs(1985) similarly focused on the
beneficial effects of currency depreciation(i.e., abandonment of the
gold standard or devaluation). For a sample of ten European countries, they showed that depreciating countries enjoyed faster growth of exports and industrial
production, than countries which did not depreciate. Depreciating
countries also experienced lower real wages and greater profitability,
which presumably helped to increase production. Eichengreen and
Sachs argued that depreciation, in this context, should not necessarily be
thought of as a "beggar they neighbor" policy; because
depreciations reduce constraints on the growth of world money supplies, they may have
conferred benefits abroad as well as home(although a coordinated
depreciation presumbly would have been better than the uncoordinated
sequence of depreciations that in fact took place).

Professor Bernanke writes:

If monetary contraction propagated by the gold standard was
the source of the worldwide deflation and depression, then countries abandoning
the gold standard(or never adopting it) should have avoided much of the
deflationary pressure. This seems to be the case.

"This seems to be the case." Now there's scientific rigor. Why
such a hedge? Because data from the 30s, particularly worldwide is
notoriously sketchy, as Bernanke writes further down, "We included
countries for which the League of Nations collected
reasonably complete data on industrial production, price levels, and
money supplies." Hey-ho - "reasonably complete data," good enough for
the science of economics.



Both Professor Eichengreen and Professor Bernanke state the data show
countries which abandoned the gold standard, that is depreciated their
currencies, were the first to mitigate deflationary problems. First,
the data remains at best sketchy to come up with any grand conclusions,
and in fact if it is of value, proves "beggar thy neighbor" worked -- if you acted first.



Secondly, even if the data is of much value, the Professors, looking to
prove the case of a monetary hammer for pounding all economic nails, at
best commit the eternal freshman mistake of correlation as causation.
The "money shot" is then Professor Bernanke's conclusion:

The expected differences in the monetary policies of the
gold and non-gold countries seem to be in the data, although somewhat less
clearly than we had anticipated.

In summary, data from our sample of twenty-four countries support the
view that there was a strong link between adherence to the gold
standard and the severity of both deflation and depression. The data
are also consistent with the hypothesis that increased freedom to
engage in monetary expansion was a reason for the better performance of
countries leaving the gold standard early in the 1930s, although
evidence in this case is a bit less clear-cut.

There's the golden words of economics -- "seem to be in the data," --
even better, "although the evidence in this case is a bit less
clear-cut." Good enough evidence for now Chairman Bernanke to bet the
dollar like some drunken sailor at the roulette table, "It's been black
four times in a row, 'seems to be' red is now inevitable. Bet the wad!"
And that's what we're doing.



Now, I'm not making an argument that getting off the gold standard
wasn't helpful. What I'm questioning is the value of a coordinated
global currency deprecation. Mr. Bernanke's monetary policy of
depreciating the dollar, classic beggar thy neighbor, is hurting exporting nations not pegged to the dollar. East Asian countries intervened in currency markets a few
weeks ago to try and keep the dollar up, and the dollar's
weakness continues to impact Euro-zone exports. As the dollar is the
equivalent of the gold standard today, we are not depreciating just
currency, but the standard itself. Despite all worrying about the
dollar, what we are seeing is the Fed Chairman trying to instill his
theorized policies prescriptions for the 1930s of "coordinated
depreciation." Mr. Bernanke, it would seem, is trying to force currency
depreciations across the board to prove his theory "a coordinated
depreciation presumably would have been better."



Monetarists' theory was behind this financial crisis, a belief in what
Professor Eichengreen calls, "the self-equilibrating tendencies of the
market." Phew -- "self-equilibrating." In the 30s that would have been
known as a ten-cent word, it's a belief today that has cost us tens of
trillions, and counting. the The financial crisis was proof of the
fallacy of much of theory at the foundation of monetarism and other
market theory, the idea it's going to get us out of the mess seems
incredulous. We're in the hands of academics trying to bend reality to
their theories. Place your bets, Professor Chairman Ben has made his.

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Twilight of the Economists

Or How to do Political Economy with a Hammer(apologies F.N.)

I've understood for a long time why people don't read economics or the financial press. I do it simply because it is the philosophy of contemporary America's power structure, and if you believe we need to change our ways, we're going to have to change the power structure. What our modern theology of economics has done best is erase any notion of power from it's tablets of laws. Across the ages, this is always job one of any successful power structure, eliminate, as best can be done, questions of power. This is most traditionally accomplished by instilling the idea the system's fundamental constructs are a priori, bestowed from somewhere above. We humans seem easily seduced by such notions.

Nonetheless, over the course of time, all human power arrangements meet challenges, many of their own making, and the philosophy and myths which have grown as the rationalizations of power suddenly lose their legitimacy. The system's underlying power reality becomes nakedly obvious, that is, for any who want to look. Such has been the situation of the financial crisis in the last two years. It doesn't matter what any economists says about this or that economic law, or what this equation shows, we have seen a very oligarchic financial sector cling to power by extorting trillions of dollars of taxpayer money using a compliant, no, a subservient political class.

We are in the midst of a Wizard of Oz moment. The financial crisis is Toto and it has pulled the curtain back for us all to see. The boys in the financial sector, the political class, and the economic priesthood from Paul Krugman to Alan Greenspan are furiously pumping out more smoke, thunder, everything they can manage, while shouting, "Pay no attention to that man behind the curtain." It's working to a degree, but there's great problems in the Emerald City.

There are two simple things that need to be done. First and foremost, the financial sector of the US economy needs to be at the very least cut by half, two thirds better yet. We can start by getting rid of derivatives, they serve no purpose, they are parasitic. Yves Smith has taken up the call on this and it needs support. To show how difficult to simply make this happen in "DC corrupt," Rob Johnson's, former economist for the Senate Banking Committee, testimony was in a Stalinesque manner disappeared from the record of that great progressive Barney Frank's committee.

Truth is, derivatives are small potatoes in the economic power game. The real load-stone of power, like Yahweh in the Old Testament, whose name shall go unuttered is the American empire. Actively occupying Afghanistan, Iraq, bases in Germany, Italy, Japan, and many other countries, the American empire is part of no modern economic equation. Accruing wealth through conquest might be older than markets themselves, both have prehistoric roots.

What is the value of empire to the American economy, in one word, large. Much larger than any economists' equation. Want proof? Go ask any Russian what the value of the Soviet empire was to the equations of "scientific socialism." All the chatter by the financiers and economists on the value of the dollar, well its foundation at this point is built much less on markets, than what Bismark called, blut und eisen.

Our political economy needs a fundamental restructuring.

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Zombie Politics

Left for dead after November 2008, the Republicans look pretty good for a bunch of zombies. The neo-cons plan to destabilize the Middle East and southwest Asia seems fully entrenched. In fact since the Democrats' triumph last November, we can't talk about simply occupying and destabilizing Afghanistan, we need in the same breath add Pakistan into the mix too, and the destabilizing of Pakistan seems to be going along swimmingly. At the same time, despite its two year and counting implosion, the Reagan Revolution seems fully in control of the economic debate in DC.

What's been laid bare in the past ten months is the simple fact the Democrats regained control of DC on the cheap. Before regaining power, there was no great revaluation of principles brought about by the decline of the New Deal coalition, nor was there a massive movement from the bottom like the conservatives in the 70s and 80s that brought the Republicans back to power. The Democrats gained power with the American people's exhaustion of a corrupt, bankrupt, and decadent Republican elite. And in a two party system, you only have one other choice, begging the question what happens come next November if Americans aren't charmed by Democratic rule? It will be an election of the living dead between zombie Democrats and zombie Republicans -- advantage zombie Republicans.

If you believe this implausible, I highly recommend a piece by Eliot Spitzer (ND 2.0). There's maybe a half dozen people in this country who both understand the financial industry and can talk intelligently about electoral politics, that is, to the extent anyone can talk intelligently about electoral politics. Spitzer warns Democrats Wall Street is an issue if used smartly can indeed raise the political dead. One thing, I'll say about the zombie Republicans, outside of their lemming march off the cliff with W in 2006, they've proved a little more politically pliable than our zombie Democrats.

Lesson for Democrats, shrinking Wall Street will lose campaign dollars, but every dollar lost will equate to a hundred votes at the ballot box -- count on it! Unfortunately, as we all know, zombies just aren't that smart.

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On Political Economy

Thursday, the government stated GDP rose at at a 3.5%, but take away the government stimulus across the board and the economy was basically flat, so says the boys at Goldman Sachs. I'm not of the economic priesthood and while away no hours inanely discussing faith based orthodoxies of private spending versus government spending, for in matters of real economic output, it makes no difference. Is that car or house you purchased any less real because of a government subsidy?

The reason our economic church's discussion on such matters are of little economic relevance to anyone outside the priesthood is in reality they are questions of power, and there are no power equations in modern economics. The last three decades, America saw an enormous shift of economic power from government to both the financial sector and our leviathan corporations. The last year and half has seen not an expansion of government power in the economy, but the government playing a unprecedented and massive role in propping up the existing economic order of the last three decades. What becomes increasingly clear from the third quarter's economic numbers is this government role is necessary for any continuation of the established order.

In the months ahead, we will see a growing chorus for continued stimulus. At a purely hack political level, future stimulus is likely to be a necessity to keep Democratic congressional majorities, and well, who could argue against that if it is to keep the knuckleheads calling themselves Republicans these days from coming to power? But this once again only begs the question, are we so politically crippled
to not be able to come up with a viable alternative to our increasingly harmful two party politics?

From a larger political economy view more stimulus is problematic as the entrenched economic order controlling our political economy uses the money to continue a unsustainable status quo, the harmful clash for clunkers program being the best example. Last week saw the price of oil once again go above $80 a barrel and there is no stimulus large enough to reflate the past three decades American economy at $80 a barrel. Today, each new internal combustible engine only insures
greater future economic problems.

We need to fundamentally reform the American political economy and that means a fundamental reform of the American government and politics. Most of the questions needing to be answered are questions of power. Today's economic solutions are not simply how to produce and consume more stuff, but questions on the distribution of power. How can people gain value by being included into decision making processes, and this necessitates a reformation of political and economic power.

The employment problem of today will not be solved with increasing production and consumption, but by cutting work hours, reducing consumption and production, while increasing public space and the role of the citizen. In large part, the 20th century
industrial model is what this crisis is about. 20th, much less 19th century solutions are not going to fix it.



In helping understand the mindset such a political economy reformation will necessitate, The Nation has an interview with Mikhail Gorbachev on the anniversary of the fall of the Berlin Wall. Mr. Gorbachev states about the thinking necessary for reform:

I am an intellectually curious person by nature and I understood that many changes were necessary, and that it was necessary to think about them, even if it caused me discomfort. I began to carry out my own inner, spiritual perestroika--a perestroika in my personal views...I began to understand that society needed a new vision--that we must view the world with our eyes open, not just through our personal
or private interests. That's how our new thinking of the 1980s began, when we understood that our old viewpoints were not working out.

Some great wisdom from the last man to pull out of Afghanistan, and remember, going into Afghanistan isn't the death of empires, pulling out is, paraphrasing Carl Spackler, "So, we got that going for us, which is nice."

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On banks and government

Yves Smith draws attention to some of the machinations in DC occurring under the rubric of bank reform. Specifically in this case, a congresswoman from IL is trying to further erode state power in regulating banks in the name of efficiency -- hey ho. On a personal note of interest from long ago Southside politics, IL AG Lisa Madigan is castigating the idea, which puts me on the side of the Madigans. It really is a shame politics suck so badly in the country, as it really can be a sublimely engaging activity of amusing twists and turns.

Anyway, this issue begs discussion on the much greater issue of the architecture of American government. Separation of powers is one of the fundamental tenets of the American system. In the American federal system, the states provide balance to federal power. With the industrialization of America, power became increasingly concentrated in DC and our mega-corporations, away from the state and local economies. Of course this was a dynamic of necessity, as economic power could only be concentrated with a corresponding concentration of political power. In the American system as constituted in 1787, this meant a loss of power for local and state institutions and a gain for DC. In one of history's great misfortunes, states' power in the US became associated first with slavery and then segregation. So, over time as the Commerce Clause of the constitution, amongst other things, was used to institute mega-corporate control, states rights increasingly became a bad word.

Today, we need to rethink the American system using the basic tenets and principles of self-government instituted two-centuries ago, with the goal of making them relevant in the 21st century. For example, instead of a traditional hierarchical system, how is self-government implemented in a distributed network architecture? In an era dominated by electronic technology can't we create distributed nodes of government connected together in a web framework? What would be the equivalent of states' rights and separation of powers in such a system?

For those still thinking DC is going to offer any answers. I only point to the personification of all that is wrong with American politics -- Barney Frank. Mr. Frank is so conflicted on the banking issue, he couldn't give a straight answer if his life depended on it. As his committee puts forth their dreck of a bill on financial reform, Mr. Frank states about derivative swindling, “There was concern that a broad grant to ban abusive swaps would be unsettling.”(tx george washington) Isn't that the idea Barney?

If you have the stomach, politics does remain high comedy.

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The Financial Question

“It remained clear, however, that unresolved questions about the
inherited financial system might well make a sudden and unexpected
reappearance if, at any time in the second half of the twentieth
century, shifts in world trade and the cost of imported materials place
severe forms of competitive pressure on the American economy and on the
international monetary system. At such a moment the cultural
consolidation fashioned in the Gilded Age would undergo its first
sustained re-evaluation, as the "financial question" once again intruded
into the nation's politics and issues of Populism again penetrated the
American consciousness.” - Lawrence Goodwyn, “The Populist Moment”

I have to say for entertainment value, there's not much greater than our
political and financial elite discussing the value of the dollar. Throw
in the goldbugs and it's high camp vaudeville. Americans pride
themselves on not knowing anything about the financial system, and, it
would also seem, they very much enjoy being pillaged by Wall Street and
their elected officials in the name of financial stability. Over the
last couple years, financial stability as was known in the last three
decades or maybe even the last seven decades has become a little shaky.
In response, Chairman Bernanke bet the buck, which has led to increasing
speculation on the dollar's future.

Just as most Americans know nothing about how their financial system
works, most who work on Wall Street know nothing about currency, except
that when any given currency is in play, there's plenty of money to be
made. And if you can get the dollar in play -- yahoo! Currency has no
intrinsic value. At its foundation, all money is a faith based system,
which does indeed leave it open to existential crises. However, while
having no intrinsic value, currencies represent some sort of value, and
the dollar represents the global economic system as it presently operates.

Today, the dollar's value is derived from the United States being a
fifth of the global economy, and despite the deindustrialization of the
past several decades remains the largest manufacturer on the planet. But
it gets even better, the dollar represents the last half-century's
experiment of corporate globalization. It is the world's reserve
currency first and foremost because the American military provides the
order, such that it is, that allows the system to function. This is what
gives value to the dollar. So, the next time you see an financial
analyst talking about the dollar going down, it means all those things
are going down with it, and most importantly for our global financial
elite, that means most of them too.

Now, don't misunderstand, there are so many structural problems to the
present global economic order, that an existential crisis on the dollar
might well come at any time. For example, problems with oil supplies
could immediately upset the dollar applecart, but that would bring
everyone else with it. My main point here is if the dollar were to
collapse, most of the people you hear talking about how to profit on the
dollar's demise would be flushed away with it. Such currency shifts
being so blithely bandied about are the stuff of major historical drama.
It took two world wars to dislodge the British pound from its global
position.

The question to ask our financial gurus would be in collapsed dollar
world, what would take it's place. The Renminbi? There's no country on
the planet more reliant on a strong dollar. The Euro? Well, let's see
them kick out the American military first. Or maybe for a little
nostalgia we could go back to the pound? Unfortunately, a top heavy
financial industry, depleting oil and gas reserves, and inbred German
royalty as a tourist attraction are not the things of a strong economy.
A basket of currencies? Well that makes the most sense, much more
difficult to implement than to say, and it would take decades.

Right now, the world is stuck with the dollar. The United States could
strengthen the dollar by cutting our oil consumption, consuming less on
whole, producing a little more, and bring the troops home from Iraq,
Afghanistan, Japan, Germany, Italy... go down the list. At the moment,
none of these things seem forthcoming from our political leadership or
the American people. So, my fellow Americans, in these existential times
for the dollar, follow the advise of Uncle Walt on Tinkerbell, "If you
believe, clap your hands; don't let the dollar die."

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the commons not so tragic

Yesterday, the Nobel committee gave their economics
prize to a "political scientist." Phew, now economics is no science and
there is absolutely no such thing as political science or political
scientists. The only people who have the audacity to call themselves
political scientists are tenured professors. Science as politics, well,
that's a whole other matter, just ask Galileo

If you had the misfortune to be involved in American politics during the 1980s, one
notion was promoted endlessly as an excuse for greater mega-corporate
control. It was the idea of the "tragedy of the commons," which if you
dig deeply at all into it, is a refutation of the idea of any social
ordering outside markets, that is, a refutation of much of human
history, welcome to the science of economics. My response to all the
free marketeers, who would tell me about the
"tragedy of the commons" was quite simple, "I always thought
the tragedy of the commons was the fence." That always ended the
conversation. Unfortunately, it didn't end the idea of the tragedy of
the commons, which was used as conclusive science for all sorts of
privatization and profit making policy endeavors.

So, it was interesting that yesterday the Nobel committee on economics
recognized the tragedy of commons isn't quite all it's been promoted.
The NYT article states (tx
tiffiniy), the Nobel judges said, 'economic science' should extend
beyond market theory and into actual behavior." Now, that's just funny,
a noble cause for any science don't you think We need to rethink
political economy at very fundamental levels.

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Accounting, Infinity, and the $

As far as economists go, I like Willem Buiter. Can't quite put my finger on it, but every now and then he gets to the root of the matter, and whenever anyone gets to the root of the matter in economics, you pretty much collapse all the theory that has been built on top of it. That's good and healthy for all concerned, except the
economic church and its priesthood.

The real root of all economics is accounting, because if you don't have
good numbers, it doesn't matter how fancy or elegant your equations.
This is a theme I've been harping on in regards to our banks. Buiter's piece
today(tx Yves S) is an excellent read on the topic. Now, one of the
great problems with the Soviet Union and other centrally planned states
is that fairly quickly accounting became useless, as everyone began
lying about numbers. Buiter writes,

Janos Kornai described at length, in Economics of Shortage,
his classic work on the internal contradiction of central planning, how
soft budget constraints became a defining feature of a centrally
planned economy and were central to its astonishing inefficiency and
eventual downfall.

The old communist regimes used to rail against "bourgeois" standards.
Well, our banking system's numbers today are so far from any reality,
we might call it "red accounting." Now there's a double entendre! This
is a great problem for both our financial system and our society. The
more our banks' books move toward infinity, the more valueless they are.

Speaking of valuelessness, we come to the dollar, which despite all
hype, is in less trouble than reported. Understand, everything comes
down with the dollar. So, if the dollar is going to have a cataclysmic
collapse, it will be the least of things you need to worry about. The
FT reports a number of Asian countries stepped in today to uphold the dollar's
value. Why? Because they have to. The whole corporate globalization
system of the past half-century is built on a strong dollar. But hey,
talking about the dollar puts it in play, and fuck the real economy,
when the dollar's in play there's plenty of money to be made by Wall
Street.

Currency shifts, such as have been talked about in recent days, quickly
move from the realm of finance and economics to the realm of history,
and as we all know, there is no history in economics, certainly not in
neo-liberal free marketeerism. The idea that our global financial
system, such that it is, can in any way conduct an orderly decline in
the dollar, isn't free market thinking, it's pure fantasy. The WSJ has
a good piece taking a more realistic view on the dollar issue.

Now, that all said, the dollar is going to have lose its role as global
reserve currency. But that means we and the rest of the world are going
to have to do things much differently than we do now, and our
economists have not a clue as to what that is.

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Deflation, Keynes, the Planet, and the $

Well as the inflation/deflation debate rages and central banks begin to
raise interest rates, you could get a good view of what an extended
term of deflation would mean by checking out the excellent new Coen
brothers' film A Serious Man. The movie's protagonist meets
a continuing series of ever greater tragedies feeding on themselves and
sending him into an extended downward spiral. This is what happens with
deflation, it feeds on itself, and over time economic activity remains
stagnant or spirals
downward.

One component of deflation can be unemployment, as people formerly
employed no longer create demand. Today, the NYT reports the Obama
administration wants to "fix the safety net," is "thinking through all
additional potential strategies for accelerating job creation," and
finally, "but officials emphasized that a decision was still far off
and that in any event the effort would not add up to a second economic
stimulus package, only an extension of the first."

Now, there certainly needs to be continued government spending, most
importantly to keep a floor intact that both people and the American
society do not fall through. However, government stimulus will at best
be only marginally effective until we fix our insolvent banking system.
Chris Whalen has another excellent
piece on our banks and until these issues are addressed there will
be no sustained economic recovery. The bank bondholders need to take
losses. Mr. Whalen suggests should we start the bid at 70 cents on the
dollar.

More importantly, I'd like to point out other problems with many of the
calls for greater stimulus. The American economy needs to change and
the more money dumped into it through the entrenched crony interests of
DC will put us further behind. 2009 DC is not 1939 DC. Just advocating
spending more money is detrimental, not helpful. The fact is, on a
planetary level, the American economy as currently constructed is
unsustainable. In America, we must in fact shrink production,
consumption, and services, and contrary to industrial economic
doctrine, in so doing, we might all very well live better lives. The
celebrants of Keynes at this point would do much better spending less
effort embracing his thinking of the 1930s and instead celebrate
Keynes' smashing of his day's economic orthodoxy, which is what we are
in desperate need of today.

Finally, every day there's more and more interest on the dollar, whose
demise at this point is greatly exaggerated. The Independent has a
piece claiming that a cabal of oil producers, Chinese, and
Europeans are conspiring against the king. Fine, we could use a little
regicide, but don't underestimate the problems of implementation. Much
talk on the dollar fails to take into account the real value of the
dollar  -- the dollar =3D globalization. The last half century of
corporate globalization has been predominately an American enterprise.
The American military provides the order, such that is, allowing this
system to function. A cataclysmic drop in the dollar would impact much
of the rest of the world to as great a degree as it would the US. It is
both agreeable and necessary for the dollar to lose its role as global
reserve currency, but do not in anyway underestimate what that
encompasses.

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