1: Capitalism’s now a lethal soul sickness, needs a reawakening
What’s the real problem? Not the economy, not markets, nor even politics. Yes, our economic pains are real. But they’re just symptoms. Something’s structural wrong. Since 2000 endless bad news: Greed, deceit, stupidity, corruption, unethical behavior, lack of moral conscience.
The real problem’s deep in our character, the “mutant capitalism” Jack Bogle warned of in “The Battle for the Soul of Capitalism.” Sadly, that battle was lost. With it we lost our soul, our moral compass. America’s character is measured by our net worth.
2. We’re already in the early stages of a Great Depression
Comparing today with the Great Depression is common sport. In a Newsweek special “Seeing Shades of the 1930s,” Dan Gross wrote: “Wall Street, after two terms of a business-friendly Republican president, self-immolated on a pyre of greed, incompetence and excessive optimism.” Today’s “new normal” economy means high unemployment for years, inflation driving prices, rising interest rates, more debt, chaos.
We are destroying ourselves from within. Former U.S. Comptroller General David Walker warns that “there are striking similarities between America’s current situation and that of another great power from the past: Rome.” Three reasons “worth remembering: declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government.” We are becoming more vulnerable to external enemies.
3. Good Depression exposes our self-destruct bubble-thinking
Before the 2008 crash, “Irrational Exuberance” author Robert Shiller warned in the Atlantic magazine that “bubbles are primarily social phenomena. Until we understand and address the psychology that fuels them, they’re going to keep forming.” Housing inflated 85% in the decade: “Historically unprecedented … no rational basis for it.”
Bubble thinking is an toxic virus that infected everyone. Shiller warns of another coming: “We recently lived through two epidemics of excessive financial optimism … we are close to a third episode.”
4. Good Depression will stir outrage, force real reforms
Writing in the Wall Street Journal, Jim Grant, editor of the Interest Rate Observer, wrote: “Why No Outrage? Through history, outrageous financial behavior has been met with outrage. But today Wall Street’s damaging recklessness has been met with near-silence, from a too tolerant populace.” Grant worries that Wall Street will run “itself and the rest of the American financial system right over a cliff.”
But we only went to the edge in 2008. Today, a rebellious “throw the bums out” hostility is blowing a new kind of bubble: Three years ago we did not have Tea Party, union fights, the Arab Spring and Greek austerity riots, all signs of an dark angry future sweeping across America.
5. Good Depression forces Wall Street to think outside the box
In a powerful Bloomberg Markets feature, “No Easy Fix,” we’re told Wall Street’s “profit formula has hit a wall.” Their “money-making machine is broken and efforts to repair it after the biggest losses in history are likely to undermine profits.”
Even Mad Money’s Jim Cramer openly admits hedge fund managers are pocketing megaprofits at capital gains rates while laughing at the stupidity of a broken political system that gives hundreds of billions in tax breaks to the richest, then takes taxes off the table as our middle class is dying under massive unsustainable deficits. Soon angry mobs will “fix” Wall Street.
6. Good Depression will deflate America’s warring soul
The American economy is a “war economy” driven by a egomaniac. I saw it firsthand as a U.S. Marine. Americans love being king of the hill, world’s cop, the global superpower. Why else spend 54% of our tax dollars on a war machine, 47% of the world’s total military budgets.
Why? Our war machine generates such “spectacular profits that many people around the world” are convinced America’s “rich and powerful must be deliberately causing catastrophes so that they can exploit them,” warns Klein in “Shock Doctrine.” No wonder the GOP takes military spending, like tax cuts for the rich, off-the-table: The war industry is a major political donor.
7. Good Depression now … avoids a far bigger depression later
In “The Price of Liberty: Paying for America’s Wars,” Robert Hormats, undersecretary of state and a former Goldman Sachs vice chairman, traces America’s wartime financing from the Revolutionary War to present wars. He warns that today we’re “relying on faith over experience, hoping that sustained growth will erase deficits and that the ballooning costs of Social Security, Medicare and Medicaid will be manageable in the coming decades without difficult reforms.”
Absent a brutal reset, we are on a historically predictable course says Kevin Phillips, Nixon strategist and author of “Wealth & Democracy:” “Most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out.” Yes, burned out, unprepared.
So pray for a Good Depression earlier rather than later. Choose now and we can be prepared for whatever comes. Or a Great Depression will hit later, when we’re least prepared, the problems bigger, our faith weaker … don’t raise the debt ceiling.
And the take home message:
If nothing else, the Republicans’ hostage taking over the U.S. debt ceiling is full of ironies. After all, Republicans voted seven times to boost the borrowing limit and double the national debt under George W. Bush. The biggest deficit drivers going forward - the Bush tax cuts, two unfunded wars, and the Medicare prescription drug plan – all enjoyed GOP support. And as it turns out, simply by doing nothing and leaving current laws (most of all, the 2013 expiration of those Bush tax cuts) on the books, annual deficits will disappear well before 2020. Regardless, despite all their grandstanding, every GOP budget proposal, including the draconian Paul Ryan spending cuts backed by 98% of Congressional Republicans, will require the United States to raise the debt ceiling repeatedly in the years to come.
All of which means that the GOP’s threats of national economic suicide over the looming August 2 default deadline are about slashing government spending and gutting the social safety net.
Appearing on the Charlie Rose show, Oklahoma Senator Tom Coburn provided a case in point. Coburn, as you may recall, walked out on the so-called Gang of Six deficit negotiations. At a time when the federal tax burden is at its lowest since 1950, Coburn like his GOP colleagues refused to countenance raising new tax revenue. And when fellow Gangsta Dick Durbin balked at Coburn’s demand to slash another $150 billion from Medicare on top of the $400 billion pledged by President Obama, Coburn stormed out.
Now, Coburn is back, pushing his plan co-authored by Joe Lieberman to drain $600 billion from Medicare over the next decade. Those savings come from raising the eligibility age from 65 to 67, means-testing wealthier beneficiaries, adding new co-pays and a $550 deductible, and instituting a new $7,500 maximum for “out of pocket” expenses. On Monday, Dr. Coburn tried to explain why his plan is necessary:
ROSE: You resigned from the Gang of Six because there was an impasse. What happened?
COBURN: Well, look, the whole purpose for bringing three on each side together was to actually come up with a plan that we could sell to an equal number of Senators on each side that would actually fix the problem. And we got to a point where we could not get to a point at which we could actually fix the problem…
ROSE: In the end are we talking about Medicare?
COBURN: We're talking about Medicare, Medicaid and Social Security. A lot of people want to discount Social Security, but we're going to have to borrow $2.6 trillion to fund Social Security over the next thirty years. And that's what we've stolen from it and spent on other things.
And even if you have all that money and even if you have the capability of borrowing it, which I doubt seriously we have the capability to borrow right now, even if you've done that you still have to reform it because our life expectancy has gotten longer and the number of people supporting each person on Social Security has gotten much smaller. And so it doesn't work.
There are so many problems with Coburn’s sales job, it’s hard to know where to begin.
For openers, it’s worth noting that since its inception in 1965, Medicare has been the major factor in the dramatic reduction of poverty among the elderly. But raising the eligibility for Medicare threatens to reverse some of those gains. For starters, life expectancy varies significantly by income, by geography and for minorities. Worse still, as the Incidental Economist noted in a review of studies of the topic, “Those without insurance prior to Medicare eligibility spent much more money on health care after they became Medicare eligible. In other words, people wait to get care until their Medicare kicks in. This is bad both for health and for the federal government’s bottom line.”
And the federal government’s bottom line will be impacted for another reason: private insurance simply costs more. As Paul Krugman lamented in reviewing the Coburn-Lieberman proposal:
The idea of Medicare as a money-saving program may seem hard to grasp. After all, hasn’t Medicare spending risen dramatically over time? Yes, it has: adjusting for overall inflation, Medicare spending per beneficiary rose more than 400 percent from 1969 to 2009.
But inflation-adjusted premiums on private health insurance rose more than 700 percent over the same period. So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse. And if we deny Medicare to 65- and 66-year-olds, we’ll be forcing them to get private insurance — if they can — that will cost much more than it would have cost to provide the same coverage through Medicare.
(It’s worth noting that Coburn’s plan is only made possible by the Affordable Care Act, which makes it possible for older Americans to qualify for and afford private health insurance.)
Sadly for Coburn, the math and the market belie his assertions regarding the Social Security trust fund.
As the continued low rates on U.S. Treasuries reflect, Coburn is wrong that “I doubt seriously we have the capability to borrow right now.” And as Krugman again explains, “Rising Social Security benefit payments might be one reason for that [budget] crisis, but it’s hard to make the case that it will be central.”
But those who insist that we face a Social Security crisis want to have it both ways. Having invoked the concept of a unified budget to reject the existence of a trust fund, they refuse to accept the implications of that unified budget going forward. Instead, having changed the rules to make the trust fund meaningless, they want to change the rules back around 15 years from now: today, when the payroll tax takes in more revenue than SS benefits, they say that’s meaningless, but when – in 2018 or later – benefits start to exceed the payroll tax, why, that’s a crisis. Huh?
I don’t know why this contradiction is so hard to understand, except to echo Upton Sinclair: it’s hard to get a man to understand something when his salary (or, in the current situation, his membership in the political club) depends on his not understanding it.
That describes Tom Coburn and his Republican Party perfectly. As Nancy Pelosi concluded in rejecting the Coburn-Lieberman plan, “It is unfair to ask seniors to get less in benefits and wait longer to get onto Medicare — all while Republicans back tax breaks for big oil and corporations that ship American jobs overseas.”
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Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
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A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
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A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
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U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
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A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
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A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
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A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
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A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
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A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
surface encounters rock tops surface encounters rock topsJuly 29th, 2011: eMarketer in the <b>News</b> – The eMarketer Blog
A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
surface encounters mi surface encounters miJuly 29th, 2011: eMarketer in the <b>News</b> – The eMarketer Blog
A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
surface encounters mi surface encounters miJuly 29th, 2011: eMarketer in the <b>News</b> – The eMarketer Blog
A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
surface encounters quality marbl... surface encounters quality marbl...July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer Blog
A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
surface encounters quality marbl...July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer Blog
A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
surface encounters quality marbl... surface encounters.July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer Blog
A look at some of this week's top stories in digital media, marketing and commerce.
July 29th, 2011: eMarketer in the <b>News</b> – The eMarketer BlogCan <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>
Netflix is using price hikes to manage the transition of users away from the physical product and towards digital streaming. While there are some similarities between that and the newspaper business, publishers shouldn't ...
Can <b>news</b> publishers learn anything from Netflix? — Tech <b>News</b> and <b>...</b>Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
U.S. Soccer President Sunil Gulati named Jürgen Klinsmann as head coach of the U.S. Men's National Team today, making him the 35th coach in the history of the program.
Klinsmann Named Head Coach of U.S. MNT - U.S. Soccer
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