Tuesday, October 28, 2008

Fundamental problems

The economy is in disarray. By any measure, this has been the worst year for the economy that most living Americans have experienced and it has not ended. While the government is trying to resuscitate the banking system, Whirlpool today announced that they were cutting ~5000 jobs because their products, the necessities of a good kitchen, just are not selling.

I will try to expand on this as part of my argument that Greens should be making the most of this situation, but are not. Click Read more! to get rest of the info.

It is easy, as Obama is wont to do, to blame this all on George W. Bush and the Republican Administration. McCain's running a messy campaign makes that easier. There is a connection between the current Republican administration and Congress, the raft of Grover Norquist funded libertarian leaning think tanks in Washington and the general idea that the market is more effective than government in creating what is good and the regulation only stands in the way of prosperity forever. Even Alan Greenspan operated on that premise from the time he first read Ayn Rand until the last couple of weeks.

Buried in this is the fact that Wall Street and the banking system had been turned into a bucket shop looking a lot like a NY OTB betting parlor. They would play a 'futures' game betting on the future price of a stock without actually owning it. By the early 1920's there were outlawed. This was just plain gambling and both state and federal laws prevented it until the year 2000. In that year, the Federal law was changed to allow what we have all heard of as credit default swaps.

Some explanations that I have heard of credit default swaps compares them to buying an insurance policy against losing your money. However, there was no regulation and you did not actually have to own the obligation (in this case mortgages) in order to get the insurance. That is rather like buying and selling insurance on your neighbor's house. Now, when the prices fell, everyone wanted to collect their money but it wasn't there to be collected. We now know why our grandfathers outlawed the practice.

As early as April of this year, the word was out. This should not have been a surprise.
The sacrosanct free market would supposedly regulate itself. The problem with that approach is that regulations are just rules. If there are no rules, the players can cheat; and cheat they have, with a gambler's addiction. In December 2007, the Bank for International Settlements reported derivative trades tallying in at $681 trillion - ten times the gross domestic product of all the countries in the world combined. Somebody is obviously bluffing about the money being brought to the game, and that realization has made for some very jittery markets.

So, we blame everything on Bush when this practice was signed in Federal law by Bill Clinton and he is no Republican. Better yet, the Federal law stipulated that no state could regulate the practice either.

Where does this have to do with Greens? It would seem to be a great time to go forward with an alternative. We know the problems, we should be telling everyone what will get us out of the mess, but we are not. We are not even making much of an effort to do so.

Greens have never come to any agreement on a set of fiscal policies. There Greens who are socialist, communists, anarchists or just generally convinced that big corporations are inherently evil. We need to be really clear about the alternative. We need to understand just what we mean by a Green Economy. It is not just, as Van Jones or Thomas Friedman (God, I hate put them in the same box) would have us believe: an economy based on global warming and energy, though that is part of it.

Even Ralph Nader comes off as being only an activist against some vaguely evil corporate state. His CounterPunch OpEd on the bailout outlines some steps to a remedy, but there are NOT based on any idea of what a Green Economics would really look like. It is only tweaking a broken system with any systemic modification. Still, that is more than I have seen from our leadership.

Republican have a Free Market ideology with a little bit of policing. Democrats have a different public ideology, but it looks a lot like the Republicans, only with more policing because they know that the Republicans are evil. Greens have no common understanding of either economic or fiscal policy and, for that reason, are not able to take advantage of the current turmoil to advance our cause.

Just look at the various committees that we have in the national party. None of them deal with economic or fiscal policies.

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