Thursday, November 27, 2008

Next stop: Weimar America?

"That’s how we got here — a near total breakdown of responsibility at every link in our financial chain, and now we either bail out the people who brought us here or risk a total systemic crash." Thomas Friedman - NYT

“Excessively cheap money in the US was a driver of today’s crisis,” (Angela Merkel, the German chancellor) told the German parliament. “I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis.” - Financial Times

David Seaton's News Links
A link at Doonesbury led me to the following, fascinating, information:
Big Bailouts, Bigger Bucks - The Big Picture
(...)If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let's give this some context. The current Credit Crisis bailout is now the largest outlay In American history. Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures - combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion
If a currency is supposed to have any relation to actual value, when I see these numbers it seems obvious to me that the dollar is entering the territory of the Wiemar Republic Deutsche Mark: meaningless paper.

The fear, of course is deflation, but a dollar that once bought victory in WWII and trips to the Moon, but today cannot save a few banks, must be a ticket to coming hyperinflation.

It is impossible to escape certain unpleasant realities of world power

No matter how seductive the figure of Barack Obama might be, glamor cannot offset the drag of worthless money combined with military impotence.

Joseph Nye's "soft power" is just that "soft". The brutal truth is that candy and flowers, a thoughtful word, are important rites of seduction, but after these rites are performed, something hard is expected. If the USA cannot "cut the mustard", other, perhaps ruder suitors will be sought and found.

To me these numbers mean that we are living suspended over an abyss, held only in the slippery hands of a fraudulent system. DS


Anonymous said...

i've been catching up on your articles, and i have to say your far more pessimistic than me. but i know why you think it's the end of the world and forgive me if it seems like a young upstart recounting something an older person actually experienced.

i know why you didnt like Obama, and i agreed with the disgust with the lack of substance. but i think the reason you (and many on the left) are angry is this is just another in a long series of letdowns that have been happening since the 1930's. you want the US to be socially democratic, and it wont happen. the same thing happened in the 60's and also with the New Deal. everyone thought we'd embrace socialism and we never have and we never will.

things are bad, no doubt about it, but to think that we're in such bad shape is kinda melodramatic. part of the reason things have gotten so bad is because of pessimism about the long term health of the economy. China's on the rise, but as you said yourself, they're dependent on the US consumer. the communist party has already made it's deal with the devil and if they dont keep about 8% economic growth they wont have enough money to buy off the public and stay in power. they'll fund anything we need to do to recover. the only sad thing is that the recovery of the US economy could slow progress toward democratic reform in China.

as far as Israel is concerned, they will ally themselves with Iraq, which will continue to improve and regain it's sovereignty much to the consternation of the Left in Europe and the US (as well as alot of Middle Eastern countries). they probably wont allow US bases, but they will be friendly to the US. that's why Iran is uneasy right now.

i didnt want Obama either, but his picks so far have calmed me a little bit. they'll be centrists, not the hard left icons that you and many in Europe may favor. they'll want to keep the US capitalist and promote free trade and they'll want to keep us powerful abroad to protect our economy. and as for the American people, they'll go with anything that will keep us rich and powerful. whether or not we're the only one isnt going to be the problem it seems.

the only thing i'm worried about is Obama will end up like Kennedy, a smart guy with a lot of other smart people around him who will lead a somewhat competent, but still mediocre administration which is heavy on image. or maybe some dumb piece of white trash will take a lucky shot at the guy.

anyway, no matter what happens, i see us ending up like Britain. still a superpower, but not the only one. and that's not too bad. maybe Chinese historians will look back a remember this as the time when democracy overcame another setback in it's inevitable march around the world.


David Seaton's Newslinks said...

I don't think the march of democracy is inevitable. I think we will be lucky if we can preserve it in the countries where it has deep, historical roots.

I wish you had a clearer idea of the difference between "socialism" and "social democracy"; the distinction is vital. Cuba is a socialist country and Sweden is a social democracy. If we had free, universal health care, we would be pretty well on the way to social democracy as it is understood in most industrialized countries.

Anonymous said...

i do have a clear distinction between the two. my thing is i call anyone who is sympathetic to anything anti-market capitalism as "progressive" in the interest of expediency. in my mind both socialism and social democracy are the same thing because because they are anti-democratic. anything which involves greater centralization is anti-democratic. even if it's done with good intentions it leads to greater inequality. anything against the middle class or bourgeois values is just evil and wrong, period. that's the key to a strong democracy anywhere right, the health of the middle class?

the problem is a bunch of bright eggs have convinced a bunch of other bright eggs that you can combine a social philosophy that calls for a "dictatorship of the proletariat" and democracy. i mean all you need to know about Marx was he was a middle class guy (i heard he was trained in the law, which if true just proves he's a trained bullshitter) who was NOT AN ECONOMIST.

why is that by the way? why is it all the "revolutionary" leaders like Marx or Che Guevera or Castro (he was a lawyer too) were all middle class and therefore basically spoiled? it just seems a like a hypocrisy. i mean has socialism really become the political philosophy of elites who are trying to slum it politically with the lower classes and want to assuage themselves from being the rich white people that they claim ruin the world? you'll have to fill in the blanks for me or point me to helpful reading material if i'm holding mistaken ideas about the difference between socialism and social democracy, but i have little interest in my life reading anything that seems to think that the optimal society is one which seems authoritarian. maybe that's the American in me. i'm "cynical" as Michelle Obama. even if it works elsewhere it will not work here, which to me just proves American Exceptionalism.

you see, the key difference between an American conservative and the rest of the world is understanding the benefit of choice. being able to pick your own healthcare for instance. you could provide "universal health coverage" (whatever that vague feel good term means). sure, you could do that, but what's better is to lower the costs of health coverage and let people buy what is best for them. certain people have certain needs and a national healthcare plan cant lead to anything but a rationing of healthcare. so which is really more immoral, a universal health care plan which is going to screw people over for stupid political reasons or one that's handled by the market? is either one really less amoral than the other? education is the same, school choice is the answer to our problems. anything nationalized is not going to accomodate choice since that's a threat to the authority of the state. and that's a problem since politicians dont always have the best interest of the people at heart. they're trying to look out for #1 just like everyone else.

that's why any attempt at social progress will fail. "progress" would involve abandoning the shackles of religion and social progress and anything that denys the individualistic side of life. that's just the way our brain works even in a culture where people are taught from birth to think collectivly. it's instinct to be look out for your own interests.


Anonymous said...

Adam you're dumb, do the world a favor and keep your ignorant deceptive comments to yourself.