Bailouts, Bubbles, Boils, and Trouble

Today, my colleagues at the New America Foundation are having a half day forum titled "Recipes for Recovery: From Washington to Wall Street" at the Hyatt Regency on Capitol Hill. It's free, open to the public and starts at 10 am EST. For those who are not nearby, there will be youtube video capsules posted later.

Headliners are Medley Capital CEO Richard Medley, former Michigan Governor and National Association of Manufacturing President John Engler, Former Congressman William Frenzel, and others. They are well worth listening to -- and those who can are invited to attend (I'll be in Pittsburgh).

But with all due respect to my colleagues, two fundamental aspects of the "recovery picture" are missing from this august set of panelists. First is someone representing labor -- even "main street" would be fine. But the link between Washington and Wall Street has been the problem. We need to see a recovery plan that links Washington's thinking and policy parameters to main street.

And now with the chatter all of a sudden about bailing out automakers, my favored speaker would be Michael Moore with a revival screening of Roger and Me.

More broadly, economic recovery in this country will not mean and can not mean putting everything back in place the way it was. Economic recovery cannot mean re-enabling the gluttony of manic consumption in this country without pumping up "production" and getting a more balanced portfolio between what we produce at home and ship in from others.

I would have incuded in this panel someone who could address the requirement of triggering new, much needed demand beyond American shores -- particularly in Japan and China. America cannot see its economic picture improve without some fundamental changes in global economic patterns.

The subprime real estate problems were nationally-self inflicted and toxic financial products were injected intravenously by the U.S. into global financial flows -- but the real weaknesses that this problem has triggered are far deeper and more profound. America has been overconsuming and underproducing for some time -- and other global dollar holders have been feeding us cheap money to keep us binging. America became the principal driver of global growth -- a single massive growth engine that employed people all around the world, while doing little to tend to job retention in the U.S.

And then the subprime crisis acted like a gravity switch -- and behaviors now need to change.

We need a global remedy to growth that unleashes demand elsewhere as the U.S. gets its economic house back in order.

-- Steve Clemons is Senior Fellow and Director of the American Strategy Program at the New America Foundation and publishes the popular political blog, The Washington Note

Comments

[Sundialsvc4]

I remember "Rosie the Riveter." (Well, I remember the posters, anyway.)

I witnessed the wrecking and mothballing of the greatest national economy on the planet, by a military industrial complex that did precisely what "Ike" Eisenhower warned us all it would do.

And yet... that national infrastructure is still there. In many cases, abandoned machinery is still in those factories. Rail lines, though paved-over in some places, still run right up to their door.

It would not take too much, really, to recall: "We Can Do It!"

Y'know, I'm not talking about flinging up trade-barriers all around the country. America does not need to do that. America has the means, the will and the way to produce for itself the very best, and to consume it. It is not necessary, much less is it wise, for us to ship goods 10,000 miles "in" and ship currency (and ballast-rock) 10,000 miles "out," when that same flow of goods and services could instead take place over the course of 20 miles.

Contrary to commonly-held opinion, "money" has no value in-and-of itself. "Money" is a token of exchange. It is "a method of accounting." Therefore, if "money" has (as it HAS...) now lost all meaning, the problem isn't the money: it's the exchange. Or, in this case, the lack thereof.

Slightly adapting the line from Harry Potter: "Are you the United States of America, or what?!"

[DuganS1]

The "military industrial complex" had little to nothing to do with "wrecking" the US economy. Most the machinery you speak of was out-dated or part of inefficient businesses. New factories and machinery over the last decades are being built abroad because in many cases the United States hasn't been a good place to invest. If policies were more favorable here towards business investment, then companies and investors would investment more domestically. But if the media and the government attack business, and if an Obama administration seeks to empower the unions, than business investment will continue to go abroad, possibly even more so than it has already.

[sposton]

Our problems will be "solved" when our wages are on par with Mexican, Chinese or Indian wages. That is the solution that over government and our business have been pursuing for decades and now, it seems, they will finally get their desired result. The only problem now is that it will take decades to bring our jobs back, if ever. The best way to deal with this issues is to create new jobs related to renewable energy sector. This could be our new economic prime mover. But for this we will need some major investments. Where are these investments going to come from when we are squandering resources on our useless Empire and its wars, and on bailout and handouts to the richest among us?

[Sundialsvc4]

Gee, sposton, aren't you selling the men and women who live in Mexico, China or India just a little bit short? Who wants to be "at the bottom?" Who among us is content to "live" when we might "live WELL?" I don't think that anyone, in any country, desires anything less than this if they can get it.

But bankers... y'know, they have their ledger-books. Their debits and their credits. But to them, one enterprise that produces widgets is just like any other. A "money-saving opportunity" that looks good on paper looks just fine to them, because their vision begins and ends at the margins of their precious little books. Lawyers, more or less, are the same way. Both of them have refined and abstracted their personal sense of "reality" until the reality is utterly gone from it. But they both manage to maneuver themselves into positions of national policy.

Maybe we Americans need to wake up and think: "just consider where you are." Consider what our grandfathers and greats did here. Consider what they took for granted, and passed down to all of us, that in (merely...) the last fifty years was squandered by what "Ike" called the "military industrial congressional complex." Accountants and Lawyers all!

"We Can Do It!" But "it" is not "pushing money around on paper," and "it" is not "building new and expensive whiz-BANG(!!)s and selling them to the guv'mint for $3 million a KA-BOOM!"

[DuganS1]

"Economic recovery cannot mean re-enabling the gluttony of manic consumption in this country without pumping up "production" and getting a more balanced portfolio between what we produce at home and ship in from others."

That's true and why the Bush administration has succeeded in rapidly increasing US exports over the last several years. The large increase in exports has been adding to GDP for a long time, and the non-petroleum trade deficit in goods in July, in fact, declined 9.8% to $29.6 billion -- its lowest level in six years, according to the Commerce Department.

[sposton]

The mini export boom was running on top of the declining dollar. This is coming to an abrupt end. We can never balance our trade imbalances by exports. The only way to do it is to produce more of the stuff we consume right here at home.

[DuganS1]

It was only partially due to a declining dollar. It was also due to booming worldwide economic growth, which began with the big US import boom earlier this decade.

[knowBuddhaU]

O brother! My Brother, you are, far and away, the most demanding of all moderators on whose posts I comment. I bow in your virtual direction (presumably, Pittsburgh).

Thanks so much for noting the glaring absence of a Labor representative on this panel. That's exactly what I'm on about.

Klein's Shock Doctrine, Perkinsian Economic Hit Men, and the Bush-APA Torture Doctrine (isolation and psycho-religio attacks) have forever changed how I see our political economy. And their absence from contemporary analyses is my greatest frustration.

Dr. Reisner on Democracy Now! http://www.democracynow.org/2008/6/19/as_senate_confirms_psychologists_helped_devise

Back on 27 November 2007, I made this comment on Dr. Stephen Soldz's Web site.
http://psychoanalystsopposewar.org/blog/2007/11/17/leaked-guantanamo-document-confirms-routine-use-of-isolation-as-psychological-torture/#comments

"We get fooled, again and again, by being [deceived]... into thinking we are only part things that must relate to the Whole via bachelor fathers with terrible tempers and unspoken habits. Our science, psychology, has midwifed this monstrous abuse of being human."

It is abundantly obvious to me, a non-matriculating grad student of psychology, that McCain/Palin and Liddy Dole both used that abhorrent method.

I have lost all faith in the usual cast of suspects. We keep seeing the same faces, and the same glaring absence of others, on our oh-so-erudite panels.

This we cannot abide.