Friday, 26 September 2008

Oh, Henry! The 700 Billion

By Niranjan Ramakrishnan

25 September, 2008
Countercurrents.org

When the Economic Stimulus of 2008 was being discussed early this year, I suggested that they save themselves the trouble of mailing out the checks to the American taxpayer, and mail the whole sum directly to China. After all, that was where it would fetch up anyhow when Americans, who were given the money in hopes they would spend it, did so.

Though no economist my guess was right; the stimulus went nowhere. And now the economy is said to be in the worst crisis since the Great Depression.

Democrats, just as they supported the stimulus package above, are again falling for the administration's cry of crisis. It is all too reminiscent of an old saying about software projects, "We don't have time to do it right, but we will have time to do it over". Here we have a political establishment that cannot muster the resources to provide subsidised health insurance, free college education, or secure borders. But we do have a bipartisan leadership happy to spend 150 billion dollars a year on foreign wars, and ask for 700 billion more to plug a problem created with open eyes.

The 700 billion dollars will not solve the problem, just as the stimulus package did not. The reason is quite simple. The housing crisis was not a matter of lending alone. After all, home ownership is not dramatically higher today than it was, say, 10 years ago (65% in 1996, 68.9% in 2005, see this website). So what is different today?

The real answer is the loss of jobs. In software design they talk of a black box approach: clarity is achieved at each level by ignoring the inner complexities of a system and examining the inflows and outflows. In such a view, if wages are stagnating or dropping, and jobs are fleeing the country, how can people afford to maintain or buy new homes? In this situation, even if you gave people the most favorable loan terms, how would they be able to repay? Clearly the housing market would have to drop. This much was clear to anyone with half an eye open. But not, evidently, to Mr. Paulson, or to Mr. Greenspan.

American wages have been under assault from two fronts, illegal immigration on one and outsourcing on the other. Curiously, the right favors both and the left half-heartedly opposes one. The governing meme in the last 30 years has been to foster both, with an imbecilic worship of false idols like globalism and diversity. So steeped are we in shibboleths that not even this so called Great Crisis of this week has forced a discussion of the true ills afflicting the land.

Instead, we have Thomas Friedman writing a letter to Iraq (in George Bush's name), telling them that we now need to attend to America, as we can no longer afford to spend our wealth in Iraq. It is hard to say which is more staggering, the man's arrogance, or his lack of shame. The Iraqis did not invite us. We went there, egged on by Thomas Friedman and his Flat Earth crowd, dismantled the state and instituted mayhem. We have the blood of several million people on our hands. Barack Obama's grouse these days is that Iraqis have 80 billion dollars sitting in New York banks (maybe he thinks they should move them to Zurich) while we're spending so much money on Iraq. Perhaps someone should remind Sen. Obama of his numerous votes authorizing exactly this expenditure. And recall that all he wants to do is spend it in Afghanistan instead.

Come home, America, said George McGovern during Vietnam. It has been the only sensible prescription for several years now. But America is a land of plenty in all things, it would seem, except common sense. Writing of George Bush's prime time address on the current 'crisis', Gail Collins captured our plight when she wrote this morning, 'Bush has arrived at that unhappy point in American public life when a famous person begins to look like a celebrity impersonator.'

But the old song from the Hindi film Tere Mere Sapne (1971) still says it best: Andhi Praja, Andha Raja, Taka Ser Bhaji, Taka Ser Khaja. (Meaning: A Blind People, led by a Blind King, A country devoid of discrimination, that would price a pound of vegetable the same as a pound of dates). Let us not forget just how special we are; the only country in the world that would have given a president like Mr. Bush a second term, and one that discusses lipstick, pigs, and the crumbling of its economy -- all with equal attention.

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