Some crisis links (11.15.2008)

America's high-technology sector has finally given way to the economic crisis, according to the New York Times. Declines in both retail sales and capital investment were blamed for these tech troubles, which the article compared to the Dot.com bust of 2001.

The G-20 nations met this weekend and pledged to work together to resolve the economic crisis (see this, this, this). They also submissively complied with President Bush's demand that they convey their heartfelt belief that economic "…reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems." They met Bush's demand even though he is now an especially weak lame-duck President. In any case, the G-20 countries plan to meet next on April 30, 2009, soon after Barack Obama takes office.

Mike Whitney accuses Treasury Secretary Henry Paulson of attempting to reinvigorate the securitization strategy Wall Street deployed since the late-90s deregulation efforts, a strategy which now stands ahead of every other contender as the decisive cause of the economic crisis. After labeling Paulson's latest gambit a "swindle," Whitney goes on to conclude:

There's more pain to come, but the suffering can be mitigated by sound decision-making and Keynesian policies. That means public work programs, bankruptcy reform, and extensions on unemployment. Paul Krugman recommends a stimulus package of $600 billion. That's a good start, but it will take much more than that. And foreign investors will have to be confident in our choices or the sale of Treasurys will slip and the US will face a funding crisis. The Fed's lending facilities have already loaned $2 trillion while the Treasury's bailout is $700 billion. By the end of 2010, fiscal deficits will be nearly $2 trillion and the total cost to the US taxpayer will be at least $5 trillion. That means rising interest rates, flagging growth and hard times ahead.

The present financial crisis is a self-inflicted wound. It started at the Federal Reserve with their cynical neoliberal monetary policies. Any solution, that does not involve the dismantling of the Fed, is unacceptable.

William Wharton also looks at New York Governor Patterson's slash and burn method of balancing New York's budget. After referring to the shocking website Reduce New York Spending, where New Yorkers can communicate with the state about the cuts they prefer, Wharton goes on to point out that:

Missing from the Reduce NY Spending website is any mention of a meeting that took place in early 2008 between Governor Paterson and Columbia University Economist Joseph Stiglitz. At the meeting Stiglitz recommended a wealth tax as the most efficient means of closing NY State's rising budget deficit. A tax of 6% on all income above $5 million would cover an estimated $6 billion of the deficit. Stiglitz favors tax increases because he claims that state and local government spending provides a greater positive economic impact than budget cuts. The implementation of a progressive tax structure, a larger capital gains tax and a small tax on financial transactions conducted in the state would more than cover the rest. Of course, this would mean allowing New Yorkers to adjust the "revenue" side of the Budget Balancing Calculator!

In other words, Governor Patterson and his advisors want most New Yorkers to wage class war on their own interests! He also wants them to express their civic virtue by consulting with the state about the implementation of New York's very own Structural Adjustment Program! Democracy this ain't!

The New York Times reports that personal bankruptcies jumped 8% last month. Unsurprisingly, the Times is also bullish on Spam!

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