Paul Krugman is one of my favorite writers and thinkers. Others from the discipline of Economics, or from global finance, include George Soros, Robert Reich, Jeffrey Sachs and Nobel laureates Joseph Stiglitz and Amartya Sen. They all agree with Krugman’s macro-concerns right about now.

I just read Krugman’s article below while scribbling in its margins. I attach my comments, along with some other articles below, as hopefully useful primers. I draw a brief, albeit crude, connection between the ideologies driving Neoconservatism in America’s current political landscape with the Monetarism and Market Fundamentalism driving its economic one. Keen comments, as always, are welcome.

Reuters article on Krugman’s statements:

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=6888422

Article excerpts and my comments:

> BANANA REPUBLIC?
>
> “So if you ask the question do we look like
> Argentina,
> the answer is a whole lot more than anyone is quite
> willing to admit at this point. We’ve become a
> banana
> republic.”

We’re not at where Argentina was 3 years ago (or
Mexico, or the Pacific Rim nations, etc. before them)
due primarily to the fact that WE control the bank (so
far). The world runs on the dollar standard — hence
we can run up massive deficits under the current
post-WWII global economic structure and not worry
about ‘default’ because the world inherently trusts in
the word and sanctity of the US government to back up
its Dollar Hegemony.

However, we’ve reached a breaking point and are
allowing the dollar to drop in value as the main way
of staying competitive (rather than through the
strength of exports alone). The gig is up, the world
knows it, and so do our central bankers. The American
people, however, by and large do not.

> Crisis might take many forms, he said, but one key
> concern is the prospect that Asian central banks may
> lose their appetite for U.S. government debt, which
> has so far allowed the United States to finance its
> twin deficits.
>
> A deeper plunge in the already battered U.S. dollar
> is another possible route to crisis, the professor
> said.

The points raised in the two sentences above are
related. The US government is allowing the dollar to drop
because of its massive trade and account deficits,
which in turn are also symbiotic. We can’t fill in
our trade deficits by matching the exporting power of
our key foreign creditors (China, Japan, South Korea,
Germany, et al.) so we drop the dollar to make our
exports cheaper and more appealing abroad. This is
self defeating, as we then make our dollar less
attractive for these very same longstanding creditors
to the US. Krugman intimates this below in
referencing the Reserve Bank of China:

> The absence of any mention of currencies in a
> communique from the Group of 20 rich and emerging
> market countries this past weekend only reinforced
> investors’ perception that the United States, while
> saying it promotes a strong dollar, is willing to
> let its currency slide further.

I.E. We are cornered, fiscally speaking. Many would
argue that we are at war to preserve the Dollar
Hegemony in trade and energy because we (seemingly)
have little other choices.

> “The break can come either from the Reserve Bank of
> China deciding it has enough dollars, thank you, or
> from private investors saying ‘I’m going to take a
> speculative bet on a dollar plunge,’ which then ends
> up being a self-fulfilling prophecy,” Krugman
> opined.
> “Both scenarios are pretty unnerving.”

Such speculators may very well include people like
Warren Buffett, George Soros, various English and
European barons, Saudi billionaires like Prince
Al-Walid bin Talal and Khalid bin Mahfouz, or more importantly,
institutional investors.

Buffett already proclaimed months ago that he’d had it with the dollar:

http://www.fortune.com/fortune/specials/2003/1110/buffett.html

http://www.guardian.co.uk/business/story/0,3604,1164319,00.html

Again, these are *capitalists* who are shying from the
dollar. Makes one think of Lenin’s old statement:
“Sell them enough rope and capitalists will hang
themselves”.

> In the longer-term, Bush’s version of social
> security reform, which Krugman says would relegate >
pensions for the elderly to the whims of volatile
> financial markets, could have wide-ranging
> implications for
> future generations.
>
> The only bright spot in having Bush in power for
> another four years, said Krugman, is that further
> economic mismanagement might trigger some sort of
> popular outcry.

Here we come full circle.

This chance of a “popular outcry” is precisely why
Neoconservatives are in power. Upon extended review,
one would sense strongly that those who have for years
anticipated the imminent fiscal blowback, including
those running our Federal Reserve banking system,
‘gave their blessings’ for the Neocons to take power
and prevent any such popular uprising.

This route of policy descends ultimately from the
Federal Reserve system and our banks, not from the
Bush administration, who are only the enforcers.
Thus, Neoconservative political ideology and
Monetarist economic ideology (what drives central
banking in the US), like their origins in Straussian
and Ayn Randian thought, go hand in hand.

> “I do believe at some point there is going to be a
> popular tidal wave against what has happened,”
> concluded Krugman. “In the meantime, you keep
> banging
> on the drum, you keep telling the truth.
>
> “And then eventually we have the great
> demonstrations,
> which I think are important to let the government
> know
> that many Americans are not happy with what is
> happening,” he said.

I.E. Economics drives politics.

When a nation’s underlying economic paradigm (which in
our case is “Market Fundamentalism”, as labeled by
Soros, Stiglitz and others), contains too many
“internal contradictions”, as attested to by George
Soros and John Kay (Oxford economist), it is bound
either for serious, painful reform, or for collapse.
The latter scenario, in turn, can lead to centralized
authoritarian government, whether it has a “socialist”
stamp on it, or a “fascist” stamp. History shows this
to be true, repeatedly and consistently.

Witness, then, our current political infrastructure,
which is devolving towards further authoritarianism –
a general trend which will invariably result in
replete centralization once the dollar collapses.

The following articles originated in mainstream press:

http://www.truthout.org/docs_04/112104D.shtml

http://www.indybay.org/news/2004/10/1697702.php

http://money.cnn.com/2004/01/27/commentary/bidask/bidask/index.htm

http://cbs.marketwatch.com/news/story.asp?siteid=mktw&dist=nwhpf&guid=%7B6C8D4585%2DE562%2D4E68%2DB446%2D058FDDB0ACA9%7D

http://www.iie.com/publications/papers/bergsten0904.htm
[detailed yet authoritative view. The IIE is a great
resource for understanding economic issues]

http://goldmoney.com/en/commentary.php

http://atimes.com/atimes/Global_Economy.html [The
Asian Times is an excellent news source, and anything
in its Global Economy section, or by Henry C.K. Liu,
is invaluable]

Lastly, here are some real estate bubble articles, which I see as directly
relevant to the above, although Krugman didn’t mention these stakes
in the above article:

http://www.taipeitimes.com/News/edit/archives/2004/10/06/2003205791

http://news.scotsman.com/archive.cfm?id=312472004

http://www.economist.com/displaystory.cfm?story_id=1794873

For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it.

- Patrick Henry

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As the president and the moral majority who have set up shop in this country
slide on to the dinner table for Thanksgiving, I wonder what God thinks
while casting his eye on that scum. There they all are sitting around a
table filled with multiples of the oversized portions the obese average
American’s daily meals already consist of, and then they have the fucking
nerve to start praying and giving thanks.

Usually the table elder puts his game-face on and asks the holiday family
and friends gathered around the yams, honey-baked hams, dinner rolls and
cranberries, to join hands. Next, the group embarks on a spiritual journey
of prayer that covers bountiful treasures, rich harvests, pilgrims, blessed
health, beloved and departed ones, and of course a “special thank you” for
the matriarch who has been mano a mano with the main course - a
bird - since daybreak.

This all sounds good and well, and just might satisfy the average person’s
notion of family values, but what lies beneath is akin to heresy of
staggering proportions. After all, when saying grace, we acknowledge God
for being the higher power, the originator, the one who brings us life.
Yet, what the common man pays homage to on this day, the Thanksgiving mascot
, a turkey, has become a casualty of such willful and corrupted desecration
by morally depraved producers and blissfully ignorant consumers joined in a
pact of hypocrisy not seen since the days of “wir haben es nicht gewust”,
that man ought not to be “thanking God” for the “bountiful harvest on the
table” but instead should lower his head in shame and humbly ask for
forgiveness for having the arrogance to believe that man is entitled to deny
one of God’s creatures the basics of existence and instead alter life into a
hormone and antibiotic laden commodity so that we all can enjoy the average
person’s portion of 1.7 Lbs. of “pure” white meat on this special day.

Family values. Whose family?

Perhaps it is me, but when I looked around and witnessed thousands of people
standing shoulder to shoulder with smiles on their faces, joy in their
hearts, and hot mochachinos in hand to complete the sensory Fantasia, I knew
the new millenium was upon us. “Jesus is coming” I thought as the lights
dimmed on stage, the music slowed, and the crowd around me stopped buzzing
and paid attention. Suddenly, an elf appeared, and another one. The crowd
cheered. They knew this was the moment for which they had braved
temperatures that had dropped into the lower sixties, for which some
children had even been pulled out of soccer practice. I held my breath, and
steadied myself, knowing I was ready to meet my maker. Next, a drum rolled,
a curtain was janked open, and who else but Santa Claus appeared in full
galore on stage. The crowd roared. “Merry Christmas” yelled Chris waving
at them. He definitely knew how to put the Chris in Christmas, and who but a
grinch cared if it was a good 5 weeks before the almighty holiday. “Are you
ready to light this tree?” he asked the crowd and they roared again. Then,
with a wink and a nod a switch was turned on and there wasn’t a dry eye in
sight.

Fashion Island has done it again, the tallest, live, decorated Christmas
tree in the United States (and possibly the world) is warming the hearts of
Newport and surrounding communities, and what better place to celebrate this
time of year than with your fellow Christians in a safe and beautiful shrine
to the God of America.

The Bush administrators, and their sycophantic press, think it very clever to conduct their policy deliberations and public reassurances with replete secrecy (an unprecedented level of secrecy), while batting away excessively probing citizens’ queries as “conspiracy theories”. They figure a generally good-spirited, optimistic and oblivious public will take the benefit of the doubt every time, regardless of the curious lack of transparency and goodwill involving how they deal with their competition.

However, no one in their right, cognitive, critical mind is fooled, not even the ever-lucid and refreshingly un-anchored (pun intended) Walter Cronkite (see below).

What became of the Iran-Contra scandal started out as an annoying, crackpotted conspiracy theory, until someone “viable” leaked some info to a then-receptive, dignified national press. The theory that “the CIA may very well have replaced a democratically elected Prime Minister in Iran with the tepid Shah” was considered revisionism at best, and looney conspiracy theory at worst, for over 40 years. However, those that coordinated a Revolution in 1979 in Iran apparently believed it as gospel, as did Secretary of State Madeleine Albright when she admitted as much on 3-19-2000.

Pretty soon, at the pace that this administration and its pedestrian machinations are unravelling, just about every solid investigative reporter, author or social scientist will be deemed a “conspiracy theorist” by those who’ve publicly replaced Madison with Machiavelli.

Spare us, please. The modern American Right does not have a monopoly on the Truth. In fact, the disturbingly regular and defensive calls of “conspiracy theory!” coming from the Right … are, on the whole, starting to resemble one big conspiracy theory from the Right.

———————————

REVIEW & OUTLOOK

The Plots Thicken

“The most trusted man in America” becomes a conspiracy theorist.

When Walter Cronkite talked on CNN last month about Osama bin Laden’s scary pre-election video, yet another cat leapt out of the conspiracy-theory bag. “I’m a little inclined to think,” Mr. Cronkite told host Larry King, “that Karl Rove, the political manager at the White House, who is a very clever man, he probably set up bin Laden to this thing.”
It’s not clear whether this was a tasteless joke or a stray filament of wishful thinking; Mr. King probed no further. Yet the comment was a reminder that conspiracy theorizing–formerly confined to the realms of alien abduction kooks and grassy-knoll debaters–is edging ever closer to the mainstream. Like it or not.
While the most notable examples now appear to be election-inspired and coming from the left, the direction may not be that significant. Experts who study conspiracy phenomena tend to agree on one thing: that at any given time people whose party is out of power are the most receptive to theories–about computer hackers in Florida, mind-controlling pro-Bush psychics, Osama “October Surprises”–that address their frustrations. In fact, the majority of all conspiracy theories seem to grow out of a sense of helplessness. The particular impulse that gave birth to a Web article like “Royal Conspiracy: Princess Diana Names Her Killer” by Uri Dowbenko may be wacko. Yet who can fault ordinary people who would prefer an explanation featuring palace assassins over a verdict that underlined the randomness of cruel fate?
Yasser Arafat probably wasn’t poisoned, but it’s no surprise if perpetually discombobulated Palestinians want to think he was. The otherwise lucid actor Will Smith has espoused the belief that AIDS is part of a plot to strike down black people. That’s a classic example, says Tim Melley, the Miami University (Ohio) professor who wrote “Empire of Conspiracy: The Culture of Paranoia in Postwar America.” Many conspiracists function like sociologists at first, he notes, “identifying patterns of inequity . . . that have effects on society”–and then they jump to blame everything on a deliberate plan. “It’s comforting. It provides an explanation that explains why your group is down and out.”

Mr. Melley suspects that whatever form conspiracy theories take, they’ll be intruding more into our consciousness in the future. For better or worse, he says, the major media are losing their authority as arbiters of the truth. The proliferation of alternative news sources on the Web and talk radio, for instance, reflects and feeds the notion that what the media powers-that-be are telling us is not the real story. Add to that the bombardments of ubiquitous advertising, and you get what Mr. Melley calls “agency panic,” where “people are worried about their own ability to control themselves, worried that someone has gotten into their head and manipulated their desire.”
So far, most Americans still have an internal meter that instantly registers the difference between questions worth exploring and questions, like Mr. Cronkite’s, that are coming from places they definitely don’t need to visit. University of Florida law professor Mark Fenster, the author of “Conspiracy Theories: Secrecy and Power in American Culture,” has detected almost no belief in various 9/11 conspiracy scenarios. And many of the election-period charges, he says, can be attributed to normal “partisan political rhetoric.”
If that’s true, a lot of the disorienting plot chaff should begin to disappear soon from plain view. Screeching about the liberal media conspiracy or the Perpetual Hidden Government now headed by Mr. Bush and his international co-conspirators should recede back into the Web. There, at least, the exposure to “agency panic” is voluntary.

Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved.

For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it.

- Patrick Henry

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(from href="http://www.theonion.com/news/index.php?issue=4045&n=0&ref=myy">The
Onion)

WASHINGTON, DC—The economically disadvantaged segment
of the U.S. population provided the decisive factor in
another presidential election last Tuesday, handing
control of the government to the rich and powerful
once again.
Bush and Cheney accept victory.
Above: Bush and Cheney accept victory.

“The Republican party—the party of industrial
mega-capitalists, corporate financiers, power brokers,
and the moneyed elite—would like to thank the
undereducated rural poor, the struggling blue-collar
workers in Middle America, and the God-fearing
underpriviledged minorities who voted George W. Bush
back into office,” Karl Rove, senior advisor to Bush,
told reporters at a press conference Monday. “You have
selflessly sacrificed your well-being and voted
against your own economic interest. For this, we
humbly thank you.”

Added Rove: “You have acted beyond the call of
duty—or, for that matter, good sense.”

According to Rove, the Republicans found strong
support in non-urban areas populated by the people who
would have benefited most from the lower-income tax
cuts and social-service programs championed by Kerry.
Regardless of their own interests, these citizens
turned out in record numbers to elect conservatives
into office at all levels of the government.

“My family’s been suffering ever since I lost my job
at the screen-door factory, and I haven’t seen a
doctor for well on four years now,” said father of
four Buddy Kaldrin of Eerie, CO. “Shit, I don’t even
remember what a dentist’s chair looks like…
Basically, I’d give up if it weren’t for God’s grace.
So it’s good to know we have a president who cares
about religion, too.”

Kaldrin added: “That’s why I always vote
straight-ticket Republican, just like my daddy did,
before he lost the farm and shot himself in the head,
and just like his daddy did, before he died of
black-lung disease in the company coal mines.”

Kaldrin was one of many who listed moral issues among
their primary reasons for voting Republican.
Bush supporters vote in Kendall, FL.
Above: Bush supporters vote in Kendall, FL.

“Our society is falling apart—our treasured values are
under attack by terrorists,” said Ellen Blaine of
Givens, OH, a tiny rural farming community as likely
to be attacked by terrorists as it is to be hit by a
meteor. “We need someone with old-time morals in the
White House. I may not have much of anything in this
world, but at least I have my family.”

“John Kerry is a flip-flopper,” she continued. “I saw
it on TV. Who knows what terrible things might’ve
happened to my sons overseas if he’d been put in
charge?”

Kerry supporters also turned out in large numbers this
year, but they were outnumbered by those citizens who
voted for Bush.

“The alliance between the tiny fraction at the top of
the pyramid and the teeming masses of mouth-breathers
at its enormous base has never been stronger,” a
triumphant Bush said. “We have an understanding, them
and us. They help us stay rich, and in return, we help
them stay poor. See? No matter what naysayers may
think, the system works.”

Added Bush: “God bless America’s backwards hicks,
lunchpail-toting blockheads, doddering elderly, and
bumpity-car-driving Spanish-speakers.”