Wednesday, July 27, 2011

The Accident on the Potomac

Obama Set to 'Fold' Too

Well, if you’ve been trying to follow the accident on the Potomac, good luck. It’s like a crashing plane zig-zagging across the sky. Republicans making $350B math mistakes, Obama putting Medicare and Social Security on the chopping block, Vice President Biden getting a backroom deal to cut the bejesus out of the U.S. budget to the trillionth degree, the Tea-Party standing strong, markets dropping and rating agencies ready to downgrade U.S. treasuries and probably munis too, even without a formal default. And a frankly dysfunctional government. This is really a moment for U.S. capitalism, and we have to understand it fully. In 2008 the economy nearly collapsed. Now their government is on the edge of a crash similar to 2008. Although lord knows the U.S. debt is justifying a downgrade. Its just that many other country’s debt is even sadder, including the EU. Except perhaps the Chinese.

The silence on the left of the Democratic Party is deafening. Black representatives standing in Congress telling us that, no, Medicare and Social Security should not be cut for hard-working people, who spent their lives paying in. And all for show. Not a real spine in the House so far. Will Obama raise the debt limit by executive order? Hmmm. Not many indications he will do so.

The national course will be similar to the local course, unless something unlikely happens. And that is cuts. The vast agreement will be to cut trillions in aid to states and local governments, for one. States are already ‘planning,’ if you can call it that, because this situation is unprecedented. And it almost guarantees an ‘official’ recession to add to the unofficial one. Krugman is even calling the present situation the “Little Depression” and, based on length and actual unemployment, he has a point. Right now I'd say we are in the Great Stagnation or Great Decline.

In anticipation of a decline in bonds, or a crash, some investors are betting against an increase in value for U.S. Treasury bonds, the center of this financial storm. Right now PIMCO, a large mutual fund company, is shorting U.S. Treasury bonds, and has been since April. And who else is shorting Treasury bonds? Eric Cantor, Republican from Virginia, House Majority leader, is shorting Treasury bonds. So he will gain financially with a decline in bond values and even a government default. A Democratic Party with spine would go crazy over this, but not a word from the 'oh so polite' ones. Other's who are shorting the market or treasuries? Still hidden.

Here is what Jeffrey Sachs has to say. This is the man that brutally instituted instant capitalism in the Soviet Union, which lead to 10 years and more of misery under Boris Yeltsin. And regretted what he did ever since. Jeffrey Sachs on July 23rd, 2011:

“"The idea that the Republicans are for the billionaires and the Democrats are for the common man is quaint but outdated. It's more accurate to say that the Republicans are for Big Oil while the Democrats are for Big Banks. That has been the case since the modern Democratic Party was re-created by Bill Clinton and Robert Rubin.

Who runs America today? The rich and the multinational corporations. Who runs the White House? David Plouffe, whose job it is to make sure that ever word, every action of the president is calculated for electoral gain rather than the country's needs. Who runs the Congress, on both sides of the aisle? The lobbyists, who win in every negotiation. And who loses? The American people, who have said repeatedly that they want a budget that sharply cuts the military, ends the wars, raises taxes on the rich, protects the poor and the middle class, and invests in America's future - not just in Obama's speeches but in fact.

America needs a third-party movement to break the hammerlock of the financial elites. Until that happens, the political class and the media conglomerates will continue to spew lies, American militarism will continue to destabilize a growing swath of the world, and the country will continue its economic decline."

So get this, even intelligent capitalists are calling for an anti-corporate third party to keep capital from driving itself off the rails. Of course, they don’t call for an end to the capitalist system, which is actually the real culprit – not just a rigid bunch of free-market political chuckleheads. The working class can take advantage of this moment – of the supreme weakness of the capitalist government – to understand that it too is fundamentally broken – and will remain so permanently. There is no hope that the U.S. government will become a friend of labor, or able to change its declining stripes.

Red Frog
July 27, 2011


AA said...

S&P downgraded US creditworthiness from AAA to AA+. What this augurs is not clear. But as the FT points out: "It is an unambiguous and loud signal of the country’s eroding economic strength and global standing."

Meanwhile, for the majority of Americans, life becomes -- to paraphrase Hobbes -- ever more brutish and nasty.

And presiding over this is this corporate marionette, this pathetic excuse for a president. Aided and abetted by the whores in Congress and the mass media presstitutes.

Things aren't looking too great.

Red Frog said...

Yes, and even the comfortable middle class - Democrats and Republicans - took a big 'bong' hit today. Market dropped 650 points today and that is because the trillion-dollar cuts will bring an official recession again. Parts of Europe are still teetering on the edge of actual bankruptcy. Somewhat frightening - and no mass action in the U.S. as yet.

Other parts of the world will lead, and are already.