Sunday, May 24, 2009

May 24 2009: Well, we are out of money now

Ben Shahn Cotton Picker October 1935
Cotton picker in Pulaski County, Arkansas

Ilargi: The president does say it: "we are out of money now". But what does it mean? Is he merely stating a fact, or is he preparing the nation for what comes next? You be the judge.

Well, we are out of money now

President Barack H. Obama
Host:Steve Scully
Tape Date:Friday, May 22, 2009

click to play video in new window

STEVE SCULLY, POLITICAL EDITOR, C-SPAN:Mr. President, as we speak to you in the White House Library, a constitutional lawyer, former law professor, as you work through the process for you personally in selecting the Supreme Court nominee, what are you thinking?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:Well, there are some benchmarks that you have to make sure that you hit. Obviously, you want somebody who is highly qualified, who knows the law. I want somebody who, obviously, has a clear sense of our constitution and its history and is committed to fidelity to the law.

Is going to make their decisions based on the law that's in front of them, but as I've said before, I think it's also important that this is somebody who has common sense and somebody who has a sense of how American society works and how the American people live.

And you know, I said earlier, that I thought empathy wasn't important quality and I continue to believe that. You have to have not only the intellect to be able to effectively apply the law to cases before you.

But you have to be able to stand in somebody else's shoes and see through their eyes and get a sense of how the law might work or not work in practical day-to-day living. And a good example of this, the Lilly Ledbetter case that came up a while back, where the justice has I believe misinterpreted the law in closing the door to a lawsuit by a woman who had worked for 20 years and had been paid less than her male counterparts.

She didn't know that she was getting paid less, when she discovered it, she immediately filed suit to get back pay and the suggestion was somehow that she should have filed suite earlier.

Well, I think anybody who has ever worked in a job like that understands that they might not know that they were being discriminated against it. It doesn't make sense for their rights to be foreclosed.

That's the kind of case, where I want a judge not only to be applying the law in front of them, but also to understand that as a practical matter. A lot of times people have weak bargaining power.

Now, in some ways it might cut the other way. I want a judge who has a sense of how regulations might affect the businesses in a practical way. And so, when they're interpreting a statute that they are saying, is congressional intent being met in this kind of circumstance. So, if there is a farm program somewhere, and you have somebody who can take the time to learn about how farmers work that's helpful.

So, in all these cases what I want is not just ivory tower learning. I want somebody who has the intellectual fire power, but also a little bit of a common touch and has a practical sense of how the world works.

SCULLY:And that's what empathy is?

OBAMA:Well that's what empathy is to me. And I think that that's those criteria of common sense, practicality, a sense of what ordinary Americans are going through everyday. Putting that in the mix, when the judges are looking at cases before them, it's very important.

Keep in mind that, the Supreme Court by definition only gets the tough cases. And even at the Supreme Court level, probably 95 percent of the cases are going to be determined by some clear statutory language, a strong precedent.

But there is going to be a 5 percent of the cases there, where the language is ambiguous, where the constitutional precedent is not clear. And in those situations you want a judge who has a sense of what's going on in the day-to-day lives of the American people and has some practical experience. And I'm confident that there are people who combine both the intellectual qualities and the qualities of judgment and common sense that will make them a great Supreme Court justice.

SCULLY:Is it safe to say that an announcement in the next week or 2 with hearings in July?

OBAMA:Well, I think it's safe to say that we're going to have an announcement soon. And my hope is, is that we can have hearings in July so that we end up before Congress breaks for the summer have somebody in place.

One of the things I would prefer not to see happen is that these confirmation hearings drag on and somebody has to hit the ground running and then take their seat in October without having the time to wrap their mind around the fact that they are going to be a Supreme Court Justice. I'd like to given them a little bit of lead time so that they can get prepared.

SCULLY:Are you worried about that?

OBAMA:No I am not worried. I think if you look at how this has worked in the past. Justice Roberts, Justice Alito, it took them approximately 70 days to get confirmed from the time that they were announced. And yes, I think that's a fair timeframe for us to work with as well.

SCULLY:Is there a justice current or former that you look at as a role model, as kind of the characteristics that you want in a Supreme Court justice?

OBAMA:Well you know, I mean each justice I think brings their own qualities, and you know, there are some justices who are wonderful writers, even justices I don't agree with, Justice Scalia is a terrific writer, and makes really interesting arguments.

You have people like Judge Justice O'Connor, who again, I might not have agreed with her on every issue, but you always had a sense that she was taking the law and seeing what the practical applications of the law in this case. She wasn't a grand theoretician, but she ended up having an enormous influence on the law as a whole.

And on the other hand there are Justices like Brennan or Marshall, who really focused on the broader sweep of history and came at a time during the Civil Rights movement, where they recognized the unique role that the unique role that courts could play in breaking the political logjam that had locked out too many people in the political process.

And so, different times call for different justices, each justice has their own strengths as well as weaknesses. And what I just want to make sure of is that any justices I appoint are people who have not only the academic qualifications or intellectual capacity, but also the heart and the feel for how Americans are struggling in their day-to-day lives.

And also, an appreciation I think for how, even though, we live in new times there are some time tested principles embodied in our constitution that have to be respected.

SCULLY:Let me follow-up on that, because you could have 2 or 3 more appointments in the next couple of years.


SCULLY:Is that the imprint that you want on the Supreme Court?

OBAMA:I don't want to jump the gun. Obviously, nobody else has announced their retirements, but the criteria that I described, a strong intellectual grasp of the law, an appreciation for the timeless principles of the constitution, and a sense of common sense and compassion and empathy for ordinary Americans, so that everybody is heard. Those are all qualities that I think make for a great Supreme Court justice.

SCULLY:William Howard Taft served on the court after his presidency, would you have any interest in being on the Supreme Court?

OBAMA:You know, I am not sure that I could get through Senate confirmation.

SCULLY:Mr. President, let's move on to health care, because some of the same people who were at odds with President Clinton trying to block his initiatives 15 years ago are at the table today. What's changed?

OBAMA:Well, a lot has changed. What hasn't changed is the ever escalating cost of health care. And so, people are seeing since '93 when we failed to reform health care that costs have continued to skyrocket.

I think the biggest change politically is, is that businesses now recognize that if we don't get a handle on this stuff that they are going to continue to be operating at a competitive disadvantage with other countries. And so they anxiously seek serious reform.

The fact that we've got hospitals and doctors who also recognize that the system is unsustainable on its current path, fiscal conservatives who recognize that the single biggest component of driving down our deficits and long-term debt is getting control of Medicare and Medicaid costs and that health care reform is critical to bend the curve.

All those things I think are converged. And you are absolutely right. The meeting we had here with insurance companies, drug companies, doctors, hospitals, labor, all the stakeholders involved, nurses, we haven't seen that before.

Now, it's still going to be very difficult to get a bill passed. But I'm absolutely committed to keeping this process moving, keeping the conversation going, focusing on how do we reduce costs, how do we increase efficiency, how do we make sure that families have some confidence that they can get health care when they need it and that they won't go bankrupt because their child gets sick.

I really think that the stars may be aligned here and we potentially can get it done if everybody comes at it with a spirit not of ideological rigidity. But if they come at it with a sense that in a practical hard-headed way, we can really negotiate and compromise and get something done for the American people.

SCULLY:But do you think that's something that what ultimately will it look like and when will it happen?

OBAMA:Well, I've put forward a plan, a very extensive plan during the course of the campaign that I continue to think was the best approach. And what I would say is you will keep your health care if you already have health care. You can have your choice of doctors. You can have your choice of plans.

But what we are going to do is to invest more in prevention and wellness programs. We are going to manage how treatments are provided more effectively. We are going to initiate things like electronic medical record, something we invested in already in the recovery program that I passed. All these things will drive down costs.

Then what we want to do is also to make sure that everybody has basic coverage. Now, they may not have the gold- plated Cadillac health insurance, but it doesn't make sense in a country as wealthy as ours that if you are working full time, you should be able to afford health care.

If you are a small business owner, you should be able to get the same low rates that somebody who works for a big company gets. And so, the principle of driving down costs at the same time providing greater care for more people, higher quality care, and making sure that we as a country as a whole are getting a better bang for our health care dollar.

I think those things are achievable. They are not going to be easy. And some of the savings you won't see for five or 10 years, because the system is going to have to work through some of these inefficiencies.

Health information technology, for example, can be a huge cost saver, because it can eliminate duplicative records, reduce medical errors, but it's going to take some time for us to build out the infrastructure so that every provider, every small community hospital has these things in place. And that's part of the role that the government can play.

But the key point here, which I think I want to emphasize again, is if you've got health care I don't want to take away your choices. I want to add your choices. I want you to be able to keep your doctor, keep your health care, but I want to be able to drive down costs. And if you are dissatisfied with your health care, I want to make sure you get some other options out there.

SCULLY:Yet, it all takes money. You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA:Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.

So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.

So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.

So, one option is just to do nothing. We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now.

Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything. That's the wrong option.

I think the right option is to say, where are the game changers, the investments that we can make now that are going to reduce costs, even if they don't reduce them this year or next year, but 10 years from now or 20 years from now, we are going to see substantially lower costs.

And if one of the very promising areas that we saw was these insurance companies, drug companies, hospitals, all these stakeholders coming together, committing to me that they would reduce costs by 1.5 percent per year.

If we do that, it seems like small number, we end up saving $2 trillion. $2 trillion, which not only can help deal with our deficit and our long-term debt, but a lot of those savings can go back into the pockets of American consumers in the form of lower premiums. That's what we are driving for.

SCULLY:You mentioned the auto industry. What will GM look like a year from now?

OBAMA:Well, my hope is, is that we will see both GM and Chrysler having emerged from this restructuring process leaner, meaner, more competitive with a set of product lines that appeal to consumers, good cars that are fuel efficient and that look at the markets of tomorrow.

Keep in mind what's happened in the auto industry. Right now, we're seeing we're projecting that maybe this year the auto industry as a whole sells 10 million cars in the United States. Well, replacement numbers for the auto industry, you know, that the number of cars to replace cars on the road is closer to 14, 15, 16 million. And what that means is when the economy recovers and consumers say, you know the old clunker has finally given out. I need to get a new car.

You are looking at a substantial market that is going to be available for U.S. automakers if they've made some good decisions now, and if they are building the kinds of fuel efficient, high performance cars that American consumers are hungry for.

I think GM and Chrysler can do that. I think they have been weighed down by a legacy of some bad management decisions, health care costs and the whole host of other things that they are now in the process of cleaning up.

We're confident that they can emerge and take advantage of that new market and actually be very profitable and thrive, but it means going through some pain now, and the thing I worry about most is that so much of that pain is borne by workers and communities that have historically been the backbone of the auto industry and so we're going to have to work intensely with those communities.

If some of those auto jobs don't come back, then what we've going to have to do is make sure that those workers are effectively retrained. We've got to make sure that those communities are supported that we are promoting green energy and green jobs as an alternative manufacturing base for many of these communities and that's going to be one of the single-minded focuses of this administration.

SCULLY:When you see GM though as "Government Motors," you're reaction?

OBAMA:Well, you know look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven't seen since the 1930's. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries.

Our financial system is the life blood of our economy and if banks collapse then businesses across America collapse. We had to make some decisions that insured that the financial system was strong.

In the same way, our auto industry is the foundation for economies all across the Midwest, and ultimately, for the country as a whole and had we allowed GM or Chrysler simply to liquidate that would have been a huge anti-stimulus on the economy as a whole, and could have dragged us even deeper into recession or even depression. Ultimately, I think that GM is going to be a strong company and we are going to be pulling out as soon as the economy recovers and they've completed their restructuring.

SCULLY:States like California in desperate financial situation, will you be forced to bail out the states?

OBAMA:No. I think that what you're seeing in states is that anytime you got a severe recession like this, as I said before, their demands on services are higher. So, they are sending more money out. At the same time, they're bringing less tax revenue in. And that's a painful adjustment, what we're going end up seeing is lot of states making very difficult choices there.

They are cutting programs some of them unfortunately essential and that's why in our recovery package we provided dollars to make sure that teachers, police officers weren't laid-off, but there is still some contraction that's taking place at the state government level.

At the same time you know states have to balance their budgets and so they have got to make some very difficult choices. In California, because of the unique way that California's government operates, you not only have a legislature and the government, but also have referendum that help determine some of these decisions. You know that's probably a little bumpier working out some of those issues.

Probably, the biggest place where the states are needing some help right now is, just rolling over their debt issuing bonds. They are still being affected by some of the freezing in the credit markets and the uncertainty and anxiety in the credit markets. And so, we are talking to state treasurers across the country, including California, to figure out are there some creative ways that we can just help them get through some of these difficult times.

SCULLY:Your Senior Advisor David Axelrod describes you as a pragmatist, what does that mean?

OBAMA:Well, I think what it means is that I don't approach problems by asking myself, is this a conservative is there a conservative approach to this or a liberal approach to this, is there a Democratic or Republican approach to this. I come at it and say, what's the way to solve the problem, what's the way to achieve an outcome where the American people have jobs or their health care quality has improved or our schools are producing well educated workforce of the 21st century.

And I am willing to tinker and borrow and steal ideas from just about anybody if I think they might work. And we try to base most of our decisions on what are the facts, what kind of evidence is out there, have programs or policies been thought through.

I spend a lot of time sitting with my advisors and just going through a range of options. And if they are only bringing me options that have been dusted off the shelf, that are the usual stale ideas, then a lot of times I ask them, well, what do our critics say, do they have ideas that maybe we haven't thought of.

So, in that sense I don't have a lot of pride of authorship on this. I don't have some need to constantly say, my way or the highway. I think the attitude is let's sit down and create a process where we can work through and find the best ideas that will help the American people the most.

SCULLY:Have you had any conversation with former President Bush since the inauguration?

OBAMA:I have.


OBAMA:Well, I think that although I've only been president four months, I think a general policy of keeping confidence with your predecessors is important.

SCULLY:Yesterday, your speech followed by the former Vice President was described as historic. Was it?

OBAMA:I am not sure it's historic. I think that I tried to create a context for what we're doing around issues like Guantanamo, my decision to ban enhanced interrogation techniques, how we can, both preserve our values, uphold our ideals and wage an aggressive battle against organizations like Al-Qaeda that want to do us harm.

And I am confident that we are stronger when we uphold our principles, that we are weaker when we start pushing them aside.

I think there was a period of time right after 9/11, understandably, because people were fearful, where I think we cut too many corners and made some decisions that were contrary to who we are as a people.

I think there were adjustments that were made even within the Bush administration to try to deal with some of those mistakes. There are still consequences, though, to some of those earlier poor decisions, and I think Guantanamo was one of them. And it's a messy situation. It's not easy.

We've got a lot of people there who we should have tried early, but we didn't. In some cases, evidence against them has been compromised. They may be dangerous, in which case we can't release them. And so finding how to deal with that I think is going to be one of our biggest problems.

On the other hand, I am very confident that if we approach this in a way that isn't trying to score political points, but is trying to create a legal and institutional framework with checks and balances, respectful of due process and rule of law, if we set up that system, then there is no reason why we can't try either in a military commission or in a federal court people who've done us harm and also spend a bulk of our time preventing people from doing us harm in the first place.

SCULLY:When in your day or in your schedule do you have time to think?

OBAMA:Well, you know what? I try to make time during the course of the day. I mean usually I've got some desk time during the course of the day where I can review materials that I think are important for decisions that I'm going to have to make later in the day.

I tend to be a night-owl. So after I have had dinner with the family and tucked the girls in, then I have a big stack of stuff that I have taken up to the residence. And I'll typically stay up until midnight, just going over stuff and sometimes push the stack aside and just try to do some writing and focus on not the immediate issue in front of me, but some of the issues that are coming down the pike that we need to be thinking about.

And there are a whole host of those issues. I'll give you a good example. We don't have I think the kind of comprehensive plan to deal with cyber security that the country needs. Now, there is not a cyber attack right now. There is not some emergency virus right now. But that's a big critical system that is vital to our economy. It's vital to our public health infrastructure.

And so you're figuring out how do we set up systems where government is working with the private sector in a way that doesn't put a crimp on innovation and discovery, but also make sure that the data is secure and the American people are protected. That's something where you got to get the wheels turning now. And so we're doing that.

There are a range of examples like that that if you don't build in some thought time, end up being pushed aside by the constant churning of events.

SCULLY:Let me just ask you one last question about your wife and your family. Time Magazine, out with a cover story about your wife and saying, "No first family has lived with the weight of hope and a hope that has landed on the Obamas."Do you feel that way?

OBAMA:No, we don't feel a lot of stress. We don't think in those terms. We think in terms of mom and dad and kids and now a dog and how do you make sure that your kids are doing their homework, brushing their teeth, treating each other nicely.

When I think about Michelle, I am thinking, am I listening to her and responsive to some of the things she is going through. And I think she is trying to do the same for me. And, we really think of ourselves as a family like every other family. We've got some issues like every other family has that they have to work through.

But I one of the things we've found actually is that the White House has been terrific for family life compared to some of our other previous situations like campaigns, because we are all in the same place. I have got this pretty nice home office, and I am home for dinner every night just about that I'm in town. And I can read to the girls, and they can tell me about their day.

I've even gotten to go to a couple of soccer games. And so, we also happen to be blessed by two almost perfect children. So we are pretty lucky there.

SCULLY:But you sell a lot of magazines.

OBAMA:Well, you know, Michelle sells a lot of magazines. I don't about how magazines with me on the cover do. I think Michelle's do very well.

SCULLY:Let me conclude with the U.S. Supreme Court. What would you tell your wife, your mother-in-law and your two daughters if it weren't a woman that you are about to appoint?

OBAMA:You know, it's interesting to me. Actually I can't tell you the number of women, including Michelle, who say chose the person you think is going to be best. If I end up having more than one nominee, I am pretty confident that it would be reflective there of some diversity.

I think in any given pick, my job is to just find somebody who I think is going to make a difference on the courts and look after the interest of the American people. And so, I don't feel weighed down by having to choose a Supreme Court Justice based on demographics. I certainly think that ultimately we want a Supreme Court that is reflective of the incredible variety of the American people.

SCULLY:Is this job what you expected?

OBAMA:You know, this is an extraordinary honor and an extraordinary privilege, and it exceeds expectations, both in terms of the challenges, but also the opportunity to just everyday be involved in issues that really matter. It's a great privilege.

SCULLY:Mr. President, thank you.

OBAMA:Thank you. I appreciate it.


Stoneleigh said...

Copied from yesterday's thread:

Anon @5:16,

Germany shrinking -16% (annualized from Q1 figures), Baltics collapsing (Estonian gov just collapsed, Latvia ditto in March, 15-20% unemployment), UK shrinking -6% and about to be downgraded. Eastern Europe in general falling into depression or near-depression. And let's not even start looking at Spain, Italy, or Greece.

Europe is indeed in for a world of hurt, just like everyone else. Many parts of Europe had housing bubbles far worse than the USA, and the consequences of that will be very unpleasant. Germany did not have a housing bubble, however, and will do much better than its neighbours as a result, despite the enormous hit its export economy will take. The abrupt changes in relative wealth within the EU are going to cause more than a little internal friction.

IMO European socialism in its current form has no hope of surviving, since it will be completely unaffordable, but that also applies to just about every current form of governance. We are all going to be finding different ways to live constrained by circumstance, if we are lucky enough to be able to adapt at all. The hope for at least some parts of Europe is that there may be enough social cohesion and concern for common humanity to help people work together, and thereby blunt the worst of the effects. It is a faint hope though IMO, and highly locational within the continent. Even if such an attitude persists within countries, it is very unlikely to persist between them unfortunately, once there is no longer enough to go around and some are doing much better than others.

Despite a recent history of civilized cooperation, Europe has a much longer history of handling such disparities with conflict, and each conflict draws on the animosity of previous ones, even if these had appeared papered over for a long time. As one small example, ask any Serbian how he feels about the battle of Kosovo Polye. From the emotional answer you would probably get, you would be unlikely to guess that it happened hundreds of years ago. It lives on as a defining moment in the national consciousness, and shapes current attitudes in a very real way. Scrape off the veneer of civilization and similar memories would surface in many, many places, as you would expect in any area with a long history.

As for relative economic freedom, unfortunately, economic freedom has too often meant the freedom to engage in 'financial innovation', which is to say the freedom to create predatory financial structures grounded in ponzi dynamics for personal gain. From the point of view of the instigators, such liberty is literally priceless, since it allows them to pick the pockets of the rest of us, and latterly virtually the whole world.

Wealth countries have experienced an unparalleled boom as a result, but was this a good thing? Metaphorically speaking, a few were invited to a party and over-indulged, and now the entire world is going to experience the consequences of the hangover to end all handovers, even though they weren't invited to the party in the first place and have not shared in any of the short-lived benefits. Financial manias look good awfully good at the time to the relatively few who benefit from them while they persist, but the good times do not last for anywhere near as long as the consequences of malinvestment on such a scale. We have seen a vast conversion of capital to waste, but have yet to recognize it as such.

Anonymous said...

Jal,(May 24, 2009 9:37 AM)

I don't understand why a the post office and other services can be held and operated by the people yet a service like the loan of capital is toll-gated by the interests of the few.

Looks like this morning Jesse ('Ladies and Gentlemen: the US Is Insolvent' ... neat picture of George too) has something about how maybe even less than 100% National debt to GDP is a possible roll for the the Titanic or at the least a tippy canoe ride to a new currency by way of an inflation expedited rip off of, for the better part, of foreign lenders.(Pliz excuse the run on).

May Day

Ilargi said...

"European socialism in its current form has no hope of surviving..."

Where in Europe do you find socialism? Is Britain a socialist country? Germany? Holland?

I think this kind of discussion is devalued from the get-go through the use of words whose meaning is being constantly eroded as those who use them don't understand what they mean. You can't pretend that the meaning of a term like socialism is defined by how those use it who can't be bothered to look it up in a dictionary.

Anonymous said...

Regarding the title of yesterday's intro article: is WTF? a sister institution of the IMF?


The Social Security surplus, starting in the mid-80's, was a thinly veiled ruse to increase the income tax on America's poorest and least able to pay as the corporate income tax was almost eliminated. The money has been spent on battle groups and Hummers, and all the SSA now has is T-Bonds in a file cabinet in Virginia which the Treasury Department is trying to figure out (maybe) how to liquidate to cash for the geezers to live on in future years.

My question for the teeming millions this morning is the following: was there a more effective method of wealth storage that an honest federal government could have used to prepare for the coming demographic avalanche?

Anonymous said...

The hope for at least some parts of Europe is that there may be enough social cohesion and concern for common humanity to help people work togetherAnd this is the antithesis of Socialism (European or otherwise). Social cohesion comes from shared values, goals, and mutual respect. Though European Socialism can claim the first two, they are claimed by reducing their populace to drone like serfs who work to create enough excess productivity to cover the massive expense of the bureaucracies that enforce the European Socialist "contract". Mutual respect is anathema. Uncompromising obedience is required.

And good luck with that. With wave after wave of failing economies rolling over Europe's little socialist fiefdoms European Socialism's days are mercifully numbered.

John Hemingway said...

Yes, when Obama says that "We are out of money now" I couldn't agree with him more. The rest of it, though, is pure propaganda, "Obamaspeak".

He wants to choose a new Supreme Court Justice who understands the law and presumably applies it, when necessary. Something he hasn't done with W and the other neocons who created our present system of torture. None of them will ever be brought to trial so long as Obama is in the White House. He's even said as much.

He wants to reduce costs in health care and to reign in those ungainly monsters of Medicare and Medicaid. But these are programs that were paid for by US workers, it was taken out of their paychecks. In short, it's their money, not his to give away to Wall Street or the Pentagon.

He's smooth, though, you gotta give him credit for that, an inspired choice as front-man for the US Oligarchy.

Stoneleigh said...

What will not survive is Europe's ability to redistribute wealth in the way many European countries do now, at the national and international levels. Without wealth to redistribute, extensive social programmes cannot be be maintained, and the relative wealth equality that Europe has seen (in comparison with the US and UK for instance) is unlikely to continue. When wealth disparity increases, both within and between countries, implying a breakdown of the 'social contract', tensions result. When those tensions overlay existing cultural differences and complex historical interactions, many of which are grounded in overt conflict, the situation can become dangerously unstable.

jal said...

Obama said …
“… the biggest place where the states are needing some help right now is, just rolling over their debt issuing bonds. They are still being affected by some of the freezing in the credit markets and the uncertainty and anxiety in the credit markets. And so, we are talking to state treasurers across the country, including California, to figure out are there some creative ways that we can just help them get through some of these difficult times.”
Can the fed. Take on those debts, (bonds), and forgive interest and keep rolling those bonds?
Do they need to change some laws?

Anonymous said...

From yesterdays notes...

Hannibel,there may be war,after all,what is the use in having the most powerful millitary in the world,If you cannot use it?I think chaos,in all it myriad,diverse forms will have more direct,lasting effect,and consequence,than whatever firefights break out as the foundations crumble.

Unless someone uncorks the nuke bottle...then all bets are off.But why?Every[nuke able] country I can think of is so enmeshed in dealing with its own social problems,that it seems too busy to start a war...

That O-man has flatly stated "We are broke"might give you a idea what he will be using as a club over those he is dealing with.They left all those nasty[extra-consitutional] rules and regs about the presidential powers intact when they thought they were going to have a thousand year rule by the its in a bit different hands,and he is leaving them all intact.That he is ,is more telling than any of his other actions as president.He knows,as a constitutional expert that the pres was to be a co-equal part of the .gov...however the executive has usurped so much power to "run"the national security state,congress has been reduced to cheerleaders when needed,and a debating club when not.Recently,one senior senetor matter of factly stated"The banks run the senate."

It all is a giant machine designed the suck every nickle out of the bottom,and direct it upward,while continuing to cut services to every citizen...

Jesse cafe has excellent coffee every morning...He caught it too.

As is on all our will this disintegration of our various structures play out?.I am starting to believe its going to be slower in some ways than the "fast crash"as many have described.I think more on the lines of a rapidly,semi-orderly,deflation of a ballon,punctured by rapid jerks downward,with every effort possible made to keep the staus quo...There wont be a "bottom",for a long,long time.So now the game stays keep what little you have that is useful in a "powered-down" society,as has been described before,and let the rest go...Now while you may still get something useful from it...before the masses figure out its over...

to the garden...


Anonymous said...


"Do they need to change some laws?"

Come on, Jal. You well know that the law has not been an impediment for either this Administration or the previous one, to achieve their goals.

The States and the people aren't top priority. Giving the Banks more power is.

Anonymous said...


One must wonder how long people have lived in Europe when they speak of the populace as "drone like serfs" and make other remarks that "Mutual respect is anathema" and "Uncompromising obedience is required".


D. Benton Smith said...

The term socialism is coming up a lot recently,even here on TAE.

All too often it's used in the pejorative sense, as though socialism is so unspeakably horrible that merely identifying a policy as "socialist" is all it takes to win any argument against it. That's an old trick, but nifty.

Here's the story, but first my Standard Disclaimer:

I am in no way a conspiracy theorist and have no faith in the efficacy of tin foil hats (although a full scale Farraday Cage might be prudent.... joke).

Nevertheless, to live is to conspire.

Wherever two or more creatures are gathered in the name of mutual self-interest, there is conspiracy. A football huddle is conspiracy. A closed door Board Meeting is conspiracy. Have I made the point?

Americans keep insisting that any sort of collective societal action is 'Socialism'' because dedicated, professional and extremely well funded propagandists have worked very diligently for many years to make that prejudicial assumption a core belief of as many people as possible. The bulk of this tripe came straight from Madison Avenue.

It's not difficult to accomplish, just expensive. All ya gotta do is say it often enough from as many sources as you can hire using as many channels of communication as you can afford. After a few years, Bingo!

Chief among the conduits for the specific bullshit about socialism were Time/Life Publishing under the direction of Claire Booth Luce and the then U.S. Office of Special Services (later to become CIA) for whom similar patriotic services were performed as part of the defense effort of the Second World War.

The company pretty well bracketed the readership spectrum, with TIME mag for the upper-middle, LIFE mag for the mainstream, Readers Digest for the unwashed masses, and My Weekly Reader for innocent tykes in schools across the nation.
(So if reading any of those has ever left you feeling intellectually soiled, now you know why.)

Basically all of this was a subset of the coordinated intelligence efforts between England, Canada and the United States starting with the run-up to World War II. After knocking out the Nazi's and Nips by the middle of 1945 they turned their sights to the next target looming on the horizon: Joe Stalin's Russia.

Because the OSS (later CIA) were staffed up originally from the ranks of Industry and the Ivy League the 'flavor' lingered, so anything that did not please these elites that was even remotely similar to Communism (e.g. socialism, trade unions, liberals, etc.) got a severe dose of what we gave Hitler and Iron Joe.

Anti-Socialism was also quite popular with emergent super power corporations who had no reason not to believe that they could literally, take over the world. They did precisely that, so I guess they were right.

The non-fiction book "A Man Called Intrepid" , by William Stevenson is an excellent read if that sort of thing interests you.

But be forewarned, the book is itself a smoothly crafted piece of propaganda with an agenda. As such there is the danger that it will leave you informed in the way its authors wanted you to be, rather than how you should be for your own good.

So, to make a long answer too short: we've been brain washed and it weren't no accident.

But not to worry. You needn't do anything about all that old stuff. It's falling down around our ears. It's in the process of going bye-bye forever.

The bigger question (now that God, Capitalism, Communism and Socialism are all dead) is this:

What in the hell are we going to build in their place?

Anonymous said...

Snuffy roared:

"It all is a giant machine designed the suck every nickle out of the bottom,and direct it upward,while continuing to cut services to every citizen..."

Never fear Snuffy, after they suck those nickels and as well finish sucking all the bullets out of our proletariat guns we will still have our teeth, right!? Oops, forgot no medical care! ... well how do you think those elites will react to severe gumming?

Up our vicious revolution!

May Day

jal said...

D. Benton Smith said...
"What in the hell are we going to build in their place?"
Does it have to be sustainable?
"Mad max" is temporary.
Ursury is temporary.

Dr J said...

Ilargi - that piece on the fake Nobel for economics should be made a permanent link so you can shortcut those who challenge you on that point in the future. Excellent article, btw, and neat how it completely validates your point of view on the subject.

Anonymous said...

...With wave after wave of failing economies rolling over DuhMerica's little Crony Capitalist fiefdoms, DuhMerica's Capitalist days are mercifully numbered.

D. Benton Smith said...

There are only a few kinds of REAL wealth storage, and Money is none of them.

Money is merely a generally shared and broadly agreed upon PROMISE of real wealth, to be paid on demand at some point in the future. It symbolically represents real wealth, but in the absence of that non-symbolic reality is just a bunch of silly documents, coins or wampum.

Real Wealth can be tangible desirable goods (which can be stored and traded later), or intangible skills and knowledge that others will give us things for when need for that knowledge or skill arises.

One way to store wealth is to learn a trade, develop a skill, build a knowledge base, or (through good works and honest dealing) become popularly indispensable to a wide circle of friends. Brainy people frequently favor this approach.

Obviously one can stockpile goods, store seeds, warehouse steel, or drill an oil well. These very tangible things are all ways to literally store wealth... but the 'sweat factor' of creating this 'stuff' in the first place makes the approach more appealing to brawny people who don't mind a little physical labor.

The middle way is to combine the two (tangible and intangible) into some sort of working infrastructure (for example a transportation system or well equipped farm).

The trouble always seems to arise from those of us who are gifted neither with genius nor brawn... but fall somewhere in between.

It's hard for us to acquire and store anything in the first place, especially against superior competition, and so we yearn for ways to cheat.

Now THAT is something we have raised to high art, and low down dirty ways... such as we are now witnessing in the financial world.

Stop yearning for easy. Start storing real wealth and dump that symbolic crap while its still worth anything at all. Something for nothing has always been the province of criminals. Stop working for those bastards (on their hollow promise of getting something for nothing or more for less) and you will be well on your way to the finest form of wealth storage possible:


Persephone said...

Grab your lasso...
Cattle rustling on the rise as U.S. recession bites

Frank said...

@Anon 10:51
The Social Security surplus, starting in the mid-80's, was a thinly veiled ruse to increase the income tax on America's poorestAnd just what was it before that? What changed? BTW, the changes in the mid 80s were not the result of a Reagan victory. Rather, they were a peace of exhaustion between left and right. After ten years of partisan and ideological bickering, the US middle, was sick of both sides and starting to show it at the polls.

So Ronald Reagan and Tip O'Niel shook hands on a package designed only to kick the can far enough down the road that neither of them would ever have to deal with Social Security again. It worked.


Anonymous said...


There is an interesting discussion over on TOD.

Launched by Nate Hagens, of course.

Some of the insights are fun.


Anonymous said...

@Anon 10:51

The Social Security surplus, starting in the mid-80's, was a thinly veiled ruse to increase the income tax on America's poorest.

"And just what was it before that? What changed?"

The "surplus" payroll taxes went into the general fund. If the surplus was grouped into income tax for the sake of analysis, it would be an indisputable fact that the percentage of the total income tax paid by the lower 50 percentile increased substantially.


"BTW, the changes in the mid 80s were not the result of a Reagan victory. Rather, they were a peace of exhaustion between left and right. After ten years of partisan and ideological bickering, the US middle, was sick of both sides and starting to show it at the polls.

So Ronald Reagan and Tip O'Neil shook hands on a package designed only to kick the can far enough down the road that neither of them would ever have to deal with Social Security again. It worked."

Reagan was basically a charming idiot, but one of the primary goals of his puppeteers was to dismantle the New Deal security blanket. They were clever enough to know that they had thrown a 25 year time bomb into the foyer of the SSA. As to O'Neil by that time in his career, his brain was totally pickled and he probably didn't understand the implications, or as you point out, he didn't care any more.
An alternative would have been just to increase the yearly tax rate and/or cut-off to cover the increases in inflation and demographics. The "surplus" funding being put into some virtual and mythical lockbox was a BS satanic ruse against the working poor and the lower and middle-middle classes. As Social Security goes the way of the dodo and Alpo and Pedigree become the menu of choice among the nation's elderly, inspection of this issue is not idle.

Perhaps the greatest irony of the whole situation is that center-left economists such a Krugman fought privatization of SS by claiming that it was sound until well into the 2030's, as if the "lockbox" has any reality of stored wealth.

Anonymous said...

D. Benton Smith said..

"One way to store wealth is to learn a trade, develop a skill, build a knowledge base, or (through good works and honest dealing) become popularly indispensable to a wide circle of friends. Brainy people frequently favor this approach."



1. a supportive system of sharing information and services among individuals and groups having a common interest: Working mothers in the community use networking to help themselves manage successfully.

1. a person attached to another by feelings of affection or personal regard.
2. a person who gives assistance; patron; supporter: friends of the Boston Symphony.

Well I guess I will have to try for the second best way to be brainy as I don't live in Boston.

-May Day-

Jim R said...

D. Benton Smith écrit:

The bigger question (now that God, Capitalism, Communism and Socialism are all dead) is this:

What in the hell are we going to build in their place?
We are going to all hold hands and sing:

"I'd like to give the world a Coke(TM), and keep it company..."

Anonymous said...

FB said...

There is an interesting discussion over on TOD.

Right and particularly intersting as I think that is the one I looked in on yesterday where Nate says:

"That list is quite long and could be longer so I'll stop....In sum, 5 years ago I was optimistic but not hopeful. Now I am hopeful but not optimistic....;-)"

... and I had to leave quickly to search for my six guns as I wanted to tell him ... "You are right to smile when you tautologise like that, partner"

-May Day-

VK said...

Hi Stoneleigh,

I was wondering why countries outside of America and the UK are not showing much psychological effects of the current crisis? It seems remarkably odd that although the Japanese and German economies are contracting faster, they are actually quite OK with it for now and aren't too concerned.

The hype, spin, propaganda and general chaos in the US and UK media is perceptible to all those who peruse those countries articles. Even here in my part of the world, life is going on. Many haven't YET felt the credit crunch at a personal level. And from reading Australian papers it hasn't been felt as acutely there as well.

So is this a symptom of a still positive social mood? That things will be alright or the fact that things are not as bad as they could be? In most parts of the world, the optimism found in 2007 is only slightly down. There is still a huge disconnect between reality and the data. What gives here? What's going on?

Anonymous said...

Excellent article today on called 'The Sinking Titantic' by Michael Ruppert.

Happy Reading :)

Anonymous said...

Hi thanks on the Titanic mind if I redirect it Here,bit easier to get to.

-May Day-

swans-of-borg said...

Eddie Cochran documentary film footage:

I see that the historical record of blacks working the cotton fields has been proven false - obviously all field workers are young, obedient, untanned, fit white folks.

The overseer says "get back to work, cotton pickers" and the rebellious youths do so with minimal grumbling.

Having documentary evidence such as this certainly proves that the historical record (reports of slavery, indentured servants, abusive managers, lack of WiFi access and other harsh working conditions)has been manipulated by special interests. (black panthers, NAAPC, pink panthers, etc...)

Also the first recorded use of "air guitar" has been moved back 23 years.

Vinca said...

Funny how Obama doesn't talk about cost-benefit and cost-efectiveness of military spending. Just health care.

Anonymous said...

As of 2009, the United States government is spending about $1 trillion annually on defense-related purposes.

Us Military spending chart 1920 to 1938 ... now that's inflation or one jolly price increase!

-May Day-

Anonymous said...

The way I see it there is "socialism” and socialism applied. There is “communism” and communism applied. There is “capitalism” and capitalism applied. None of these terms exist in their text book form, and all in their applied form are nothing but varying degrees of fascism - vertical power structures where power and wealth flow from top to bottom.

Anonymous said...

Defense spending 1910 - 2010 (est)

Anonymous said...

Does anyone care to do a case study on New Zealand? I would like to figure out how likely it is that my country, and my country's banks, are going to go the way they seem to be going in US and UK. What information do I need to look at?

Part of the concern is that I am trying to figure out what to do with the cash that is my house deposit fund (still a few more years saving to be done, plus the housing market has a very long way to fall yet). I can get better interest rates with the banks than with government bonds, so I am trying to find out how safe the banks are here.

All comments will be very much appreciated, thanks in advance.


VK said...

@ iris 9:48 pm

You write, "still a few more years saving to be done, plus the housing market has a very long way to fall yet"

The mention of falling house prices is precisely where the problem lies. The basic accounting equation is Assets = Liabilities + Equity.

Now if a banks asset values are falling i.e. housing, commercial real estate, loans to businesses etc then it must raise equity capital as their liabilities in the form of customer deposits, CDS contracts etc are still present. If they can not - they are insolvent i.e. bankrupt.

So in the world that we see here at TAE, house prices will plummet in NZ, meaning that there will be a banking crisis. They will plummet because of plunging world trade, industrial output, decline in stock markets and thus global purchasing power.

So you must be very careful at looking at the balance sheets of your bank, I reckon a 20% decline in home values renders banks insolvent (hence the US and UK systems are already bust). The govt will only be able to save a few banks as their tax revenue will plummet - NZ being highly dependent on agricultural exports.

Generally look for the same pattern to happen in the Oz, NZ as is happening in the US and UK. While it is true that NZ and OZ have been buffered to some extent, the harsh reality is that come the next down leg which is predicted to last the whole of 2010 and we begin the panic stage of the crisis where people are forced to sell what they have to survive as their purchasing power declines.

You might be interested in Steve Keen's blog, for a more detailed analysis on the situation in that part of the world.

Anonymous said...

VK, thanks for your comments. I understand that so far the housing here has declined approximately 10% from the peak in December 2007, and I had already convinced myself that it will fall a lot further. So you are telling me that the property decline necessarily results in trouble for the banks. I suppose I have my answer!

I will also have a look at that blog you mentioned.

Kind regards,

Anonymous said...

VK, I got a broken/dead link there would this be what you mean?

May Day

VK said...

Yes correct May Day. That's the right link.

@ iris,

Keep an eye on NZ exports vs imports, as well the off balance sheet disclosures on the bank balance sheets. When unemployment begins to shoot up, I reckon that's a sign to get into the bond market! Because rising unemployment means more credit card write offs, businesses going bust, sheep being fleeced and Orcs having to sell their weaponry at a steep discount (sorry can't help it :) LOTR and sheep define NZ as well as Anchor) and that means heavy losses for the banks.

I'm sure that banks such as ANZ and Westpac are quite significant players in the whole derivatives ponzi scheme that looks all set to unravel violently at some point as well in the post green shoot hoopla that the US and UK will experience.

ps - The Baaahnks are covering our eyes with wool. (Apologies to any NZ sheep reading this)

scandia said...

Anon and May day...Thanks for the Ruppert article. It is a reminder that more than the financial system is at risk of collapse.It makes sense to me that survival requires a smaller scale. It makes sense to me that geography will shape networks.
I stopped running a car three years ago. I have created a meaningful life within the range of walking/public transit. Yet I still chaff at how small my world has become. I used to hop in my car and range far and wide. I miss that mobility.
Yesterday I took a bus to go to the Polish market to buy some decent rye bread. On the way home I realized that I needed to add $5 dollars return bus fare to the price of the bread. That loaf actually cost $8.79 plus the travel time committment of about 2 hours. Time to source bread within walking distance. Or, horror of horrors, learn to bake rye bread!

Anonymous said...

VK, no worries, I am a huge LOTR fan.

NZ has had a trade surplus for years, except from April '08 to Feb '09, though I see the balance of payments is negative (isn't that a contradiction?). I can't find up to date statistics for the net external debt, but I understand it is high and there is talk of the AA+ credit rating being downgraded.

Re agricultural exports: a headline today was "Anger grows at US dairy protectionism" - dairy of course is one of the most important exports, espcially after booming in recent years.


philsharris said...

Is there a significant transcription error in the Obama transcript?
"And you know, I said earlier, that I thought empathy wasn't important quality ... But you have to be able to stand in somebody else's shoes and see through their eyes ..."

I think it should read " ... was an important quality"

Obama is right - empathy should be right at the top.

philsharris said...

Is there an important transcription error?
What did Obama say?
" ... And you know, I said earlier, that I thought empathy wasn't important quality and I continue to believe that. ... to stand in somebody else's shoes and see through their eyes ..."
I guess the transcript should read " ... I said earlier I thought empathy was an important quality ..."
I guess in that case Obama is dead right.

Anonymous said...

Whatcha talkin bout Willis?

Unknown said...

VK, thanks for the beautifully haunting comment on the earlier thread, starting with "Life is truly absurd." It's comforting to have someone express feelings so similar to my own.

VK said...

@ rumor

Helps if you've had a bit too much wine followed by some good ol' whiskey :)

So the big news for the day so far is the mini bombing of starbucks in Manhattan, the North Korea nuclear test and the dollar sliding to new lows for 09.

Anonymous said...

Check out 'Bernanke's Wager With the US Bond and Dollar' on Jesse's Café Américain

Highly amusing 'cartoon' as well ... "These are very find bonds indeed" Indeed a 'heh!'

Anonymous said...

Re the North Korea Bomb, I would go further and suggest that not only should Korea have a bomb but that each embassy in the world should contain their country's bomb. It might just bring greater civility and sense to the world. I as well think that outlawing of duelling with sabres at dawn was a great mistake, especially as I am an early riser and my neighbour isn't ... nothing so fine on a a dewy early morning as a bleary eyed neighbour I always say.

May Day

Anonymous said...

A truly excellent New York Times article about making and repairing things and working with your hands. It is, as one of the many comments says, one of the best articles ever published in the newspaper.

The Case for Working With Your Hands


Anonymous said...

@ scandia,

Here's quick simple bread recipe which requires no kneading, no waiting for yeast to rise, and you can even personalize the recipe by adding rye grains or rye flour if you prefer that.

Ilargi said...

New post up

ronald said...

REF: Real Estate goes up with the rate of inflation.

BLS has a calculator on line which allows one to enter dollar values from prior years and it will calculate the 2009 value. Very helpful to understand what the home value should be minus the bubble. Here is the link: