Former fed chair Paul Volcker, TARP bailout overseer Elizabeth Warren and Nobel economist Joseph Stiglitz all slammed the government's approach to the economic crisis today:
- Volcker accuses Obama’s National Economic Council Director - and consummate financial insider - Lawrence Summers for slowing down the effort to organize a panel of outside advisers on the crisis
- Warren has discovered that Paulson overpaid by $78 billion dollars for toxic assets purchased from financial institutions
- And Stiglitz writes:
"Perhaps the entire strategy is flawed? Perhaps what is needed is a fundamental rethinking. The Paulson-Bernanke-Geithner strategy was ... based on a failure to grasp some of the fundamental changes in our financial sector since the Great Depression, and even in the last two decades."
This Depression is actually an extension of the last. In the last Depression, we had an agricultural economy displaced by mechanization. There was a glut of product, snowballing into falling prices, loss of farms, loss of jobs, ect.
ReplyDeleteAfterwords, we carried mechanization and automation to it's logical conclusion and are now faced with Depression 2. The Internet, robots, and automation first made it so one person could do the job of many, eliminating work for many. Then, monopolized corporations (a hangover idea from the last crunch) were encouraged by corrupted goverment to seek slave labor offshore and huge profits. Pay nothing, charge a lot, skeletalize the business and pay CEOs like kings.
The problem is, you eventually eliminate everything but subsistence jobs and nobody is able to pay for product. Pyramid schemes like this one eventually collapse when they run out of people willing and able to pay into them.
Traditionally, the next step is to start a phony war, profiteer outrageously, cut down the population and start over again with power and wealth further consolidated.
There are a couple of problems with that in the present context. The population is really not as dumb as it used to be even with the soma of TV. Blame that on the G.I. bill, student loans and Internet. Also, WMD weaponry can kill absolutely everyone and is accessible by pretty much everybody.
This format has been going on since the Knights Templar brought back the idea of banking and interest from their foray into the Middle East. They eventually replaced despot kings, but have become the new despots and have not really had a new idea since.
What we need is a new paradigm to cover the shift in reality. We put things off after the last Depression rather than really address the shift in paradigm that would eventually overtake the basic structure of economy. What is the nature of work and economics if you no longer need people?
I agree that we need to scramble to get people working, no matter how much it costs in ultimately worthless fiat money. A Recession quickly turns into a Depression when people start starving and nobody but despot wannabe kings want the war solution.
But, we also need to fashion a new paradigm. We have the unique opportunity, born by crisis to come up with something new. Why waste time rehashing the past?