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European Leaders Meet as More Measures Extended: Government leaders from the major European Union members gathered in Paris on Sunday to discuss their collective response to the financial crisis -- from Newsgator What every leader in the world is dealing with is a staggering amount of debt being piled up the United States. We cannot get our minds around the magnitude of each new set of figures brought forth in each new day's news. So I have been doing some reading, as perhaps many of you have, also. Todays' post is to share what I have discovered, thanks to surfing. and thanks to my regular contributor, Jon's e-mail links (marked:#).
During tough times it is natural to look for wisdom from people smarter than we are. That is why Paul Krugman and others like him have been writing and speaking to hungry audiences swirling in insane headlines. This is a happy headline: Economics Nobel is won by Paul Krugman trumpets the New York Times abut their Op-Ed star. The blogosphere's progressives seemed happy as clams, for example, (Krugman Wins Nobel in Economics by egregious 10/13/08 at Firedoglake.
We also look to really smart people who know how to write to our sad souls. To these "worst of times," as Garrison Keillor# calls them, comes one of my favorites. Keillor, my prairie home companion, said on October 8, 2008:
We are a stalwart and stouthearted people, and never more so than in hard times. People weep in the dark and arise in the morning and go to work. The waves crash on your nest egg and a chunk is swept away and you put your salami sandwich in the brown bag and get on the bus. . .
If you could only read one article on the current economic crisis, I recommend this one. "States warned about impending mortgage crisis#-- Bush administration, financial industry thwarted efforts to curb greed" at Business Week (via MSNBC - 10/10/08), by Robert Berner and Brian Grow. This is a must read 3-page article for all of us trying to find out what was behind such a massive meltdown of governance. To quote just a bit:
A number of factors contributed to the mortgage disaster and credit crunch. Interest rate cuts and unprecedented foreign capital infusions fueled thoughtless lending on Main Street and arrogant gambling on Wall Street. The trading of esoteric derivatives amplified risks it was supposed to mute.
One cause, though, has been largely overlooked: the stifling of prescient state enforcers and legislators who tried to contain the greed and foolishness. They were thwarted in many cases by Washington officials hostile to regulation and a financial industry adept at exploiting this ideology.
The Bush Administration and many banks clung to what is known as "preemption." It is a legal doctrine that can be invoked in court and at the rule-making table to assert that, when federal and state authority over business conflict, the feds prevail — even if it means little or no regulation.
One of the most important reasons for my reading has been to try to put some mental borders around the size of the problems we face. In this article, five prominent economists share their thoughts on what's happening and how bad the situation really is. It is titled, "The End of American Capitalism#? -- 5 Short Takes on Where the Financial Crisis Might Be Headed." AlterNet published this great article from Aljazeera, (10/7/08). I am fascinated, by the way, that we have to read about our own country in Aljazeera.
A few years ago, I was also fascinated when Francis Fukuyama has his miraculous conversion to being smart again, from being in Neocon World. Here's his latest and it is just wonderful. He begins, "Along with some of Wall Street's most storied firms, a certain vision of capitalism has collapsed. How we restore faith in our brand: In "The Fall of America, Inc.,#" by Francis Fukuyama, from Newsweek (10/4/08), he concludes,
The unedifying response to the Wall Street crisis shows that the biggest change we need to make is in our politics. The Reagan revolution broke the 50-year dominance of liberals and Democrats in American politics and opened up room for different approaches to the problems of the time. But as the years have passed, what were once fresh ideas have hardened into hoary dogmas. The quality of political debate has been coarsened by partisans who question not just the ideas but the motives of their opponents. All this makes it harder to adjust to the new and difficult reality we face. So the ultimate test for the American model will be its capacity to reinvent itself once again. Good branding is not, to quote a presidential candidate, a matter of putting lipstick on a pig. It's about having the right product to sell in the first place. American democracy has its work cut out for it.
Trusting that I will not offend anyone, I cannot help but include this little snippet in a post about very smart people. It is headlined, "Maybe We Should Blame God for the Subprime Mess#," and written by David VanBiema (10/3/08) at Time, Inc. To quote the opening:
Has the so-called Prosperity gospel turned its followers into some of the most willing participants — and hence, victims — of the current financial crisis? That's what a scholar of the fast-growing brand of Pentecostal Christianity believes. While researching a book on black televangelism, says Jonathan Walton, a religion professor at the University of California at Riverside, he realized that Prosperity's central promise — that God will "make a way" for poor people to enjoy the better things in life — had developed an additional, dangerous expression during the subprime-lending boom. Walton says that this encouraged congregants who got dicey mortgages to believe "God caused the bank to ignore my credit score and blessed me with my first house." The results, he says, "were disastrous, because they pretty much turned parishioners into prey for greedy brokers."
To conclude it seems logical to assert that we will need some very smart people to get us out of this mess, starting with Barack Obama. The following brutally honest article makes my point that we need the smartest person we can find to lead us forward. "Bush binges; his successor will pay," by Jim Vandehei and Mike Allen at Politico.com (9/28/08). To quote, a bit extensively:
Barack Obama says a John McCain victory would amount to a third term of the Bush presidency. What he doesn't say: an Obama victory would, too.
While both nominees love to talk about their big agendas for change, whoever wins will take office with his obligations defined and options constrained by what Bush dumps on his lap.
The focus right now – and probably for many months to come – is the bailout binge aimed at saving our financial system. All told, the government will likely put more than $1 trillion on the line (with hope that the money will be recouped down the road).
Then there are the two wars, in Iraq and Afghanistan. Their combined cost is fast approaching $1 trillion, too – and both will eat up the time and budgets of the next president.
Then there is also the prescription drug benefit Bush added to Medicare. It carries a projected price tag of nearly $700 billion over 10 years and serves as a powerful reminder of how big – untenably big, many experts say – our entitlement programs have grown.
None of that spending was cooked into the federal budget when Bush took office eight years ago, leaving a budgetary hole almost too deep to comprehend. It will tie the hands of President McCain or President Obama in ways neither candidate has reckoned with yet on the campaign trail.
“It’s really a federal fiscal catastrophe in coming years,” says Chris Edwards of the Cato Institute, a libertarian-oriented think tank. “With all this stuff coming up now, it’s massive, big decisions the next president is going to have to make.”
View my current slide show about the Bush years -- "Millennium" -- at the bottom of this column.
(Cross-posted at The Reaction.)
My “creativity and dreaming” post today is at Making Good Mondays.