Oh What a Lovely Crisis

by Gary Tedman

Today there is a problem, a spectre isn't haunting Europe, instead a vacuum has enveloped it. This vacuum is the absence of leadership in the face of the worst world capitalist crisis in economics since the last worst world capitalist crisis in economics. Our politicians seem unable to respond to it with anything but well worn phrases and old excuses. Fat cat capitalists (Goodwin, AIG executives) make off with huge bonuses for taking their institutions into the most colossal debts in corporate history, while politicians who can put 'enemy combatants' into an offshore prison and torture them with impunity, claim they are powerless to stop these businessmen 'for legal reasons' stuffing their filched taxpayers wealth offshore (as they are wont to do).

Things don't add up even superficially anymore, and it is becoming obvious to the masses with each passing minute that they don't, but the politicians still repeat the same platitudes as solutions: they will have new regulations (but tomorrow), they will tightly control (but at arms length), they will stimulate fiscally (but only the rich who don't need it), they will get lending going again (even while they blame debt for the problem), they will… etc, etc.

We now live 'in interesting times', and it is indeed a curse if this is anything to go by. And yet it also seems, in these times, to be a strange fact that even the ruling class don't understand why there isn't more protest, why the obvious anger hasn't turned out onto the streets as an, at least cathartic, outburst of anguish, they are a little mystified, pensive, subdued.

But the people want a real solution and they can see there is nobody to turn to, so homogeneous and bland has the political landscape become in modern advanced capitalist societies that authentic opposition is invisible, and especially so to its press, which has got into the habit of turning a blind eye to protest and real political innovation so much that it no longer knows how to 'write it up'.

Latterly they are trying, because they have to, for there have indeed been some real protests that have led to changes of government, Iceland and Latvia for instance, but they cannot help but express their own incredulity that they do in fact need to cover such events. Though even these events have been characterized by a lack of conviction in the solutions they have proposed or that have been offered to them. The people sense they are not real solutions, just stop-gaps and the prolonging of an illusion that governments know what they are doing.

They do not know. These governments and administrations have prided themselves for a long history on not knowing about how the economy actually works and on not 'commanding' it. The 'command economies' are always bad, the 'free' economies are always good, they have always said. Now the 'free' economies have gone bad it is still the fault of the 'command' economies, whose acolytes have conspired to cause the demise of this great free system by interfering in its freedom with stupid and unnecessary rules and regulations, and they look back all misty eyed at a time when the free market was truly free, which never existed because a market is, of course, a system of regulations; yet they persist with the myth for reasons of their own sanity, which is in effect their own necessary insanity: the cause of the global problem must be anything but the untrammelled profit motive, why? because they are this motive personified, or at least its visible expression. Their fundamental idea of a 'free market' is being able to take by violence, the rules are meant for the victims.

What's going to happen? There may be a recovery; there may be a long depression. Pretty graphs are charted showing next year's growth, they seem to be based on wishful thinking, not even the usual wishful thinking of the usual statistics of what people think and wish, but ideas drawn from pure thin air. The graphs go down in a curve below the line, but in the next year they magically appear above the line again. Suddenly the fiscal stimuli must have worked, the newly unemployed are invited to think, and there will be jobs again galore and credit again galore and all of this nightmare will be remembered as just that, simply a nightmare, and thus unreal; the slow to be installed regulations can then be ditched, the arms length policy can gain strength (or weakness!), the fraudsters and credit swindlers can start up again quietly, and the governments can get back to what they do best, providing a more believable illusion of leadership over it all. They wish.

Notes on the stimulus bill

By Joel Wendland

The Republicans in Congress hated the economic recovery bill from the beginning. I think it reminded them too much of the past eight years and Bush's failure to handle economic matters in any intelligent way. It reminded them of how they toed Bush's economic line without deviation and voted for every single one of his budgets and his $3 trillion war in Iraq blindly. It reminded them of all the reasons they lost power.

This psychological turmoil combined with the humiliation of the loss in November prompted a bad decision-making process on how to handle the new political and economic reality in the country. When Obama and the Democrats introduced the stimulus package, top Republicans said to each other, let's fight the election battle all over again. Let's put our free-market fundamentalist, trickle-down ideology and policies that lost us the election out front – even with John McCain leading the way – and have it out all over again with Barack Obama.

So McCain led the way with an amendment to the stimulus bill that would have cut all the job-creating provisions in favor of hundreds of billions in new tax cuts for the wealthiest Americans. Needless to say, it flopped.

Other Republicans had other ideas. They have been a little trickier. They wanted to influence the outcome of the bill without having to actually vote for it.

Republican Sens. Tom Coburn, Chuck Grassley, Johnny Isakson, Mel Martinez, and David "DC madame client" Vitter added their own amendments or co-sponsored other amendments that were ultimately adopted to the bill and finally passed.

So much for the argument that the bill lacked bi-partisan input. Ironically, none of these Senators voted for final passage. Each one, instead, claimed the bill lacked bipartisan support and cost too much.

Funny claim, because two of those amendments offered by Republicans with bipartisan support added something like $100 plus billion to the final Senate version of the bill. One of those provisions actually would have provided $30 billion or so for a housing tax credit. They claimed it addressed the country's housing problems. In fact, the bill would have given a $15,000 tax credit to real estate speculators trying to take advantage of falling house prices by buying foreclosed homes on the cheap and flipping them for quick profits, and the government, under the Republican amendment would guarantee them a $15,000 profit for each house -- paid for by taxpayers.

That scheme wouldn't have fixed "the housing problem"; it would have exacerbated it. In fact it would have robbed taxpayers to pay off speculators.

But even with that Republican amendment, those Republicans who insisted it was meant to fix housing failed to vote for final passage of the bill.

(Note: the compromise package hammered out in conference Wednesday evening cut that $30 billion tax credit to $2 billion and reasonably limited it to first-time home buyers and imposed an income cap on who could claim the credit.)

Even more ironically, after the group of five Republicans named here (and probably more I have overlooked) added their amendments and raised the price tag of the total bill by more than 12 percent, most Republicans refused to vote for the bill.

Guess what their argument was. You got it. It cost too much and raised the deficit too much. This only shows a deficit in the Republican thought process. Their tax cut policy and war in Iraq added more than $5 trillion to the national debt after Bush inherited a surplus. Their tax policies delayed economic recovery after the 2001 recession for more than four years. Their economic policies and ideology of free-market fundamentalism handed the big banks the keys to the kingdom. They looked the other way as bankers robbed home buyers and made business decisions that caused the credit meltdown and the current economic collapse.

I don't envy Barack Obama the political and economic difficulties under which he leads this country. But the Republicans have proven, if nothing else, the bankruptcy of their ideas and the hypocrisy of their politics.