Originally Posted by Mr. Reed

A year after financial crisis, the consumer economy is dead

IMO this is a huge, fundamental even, crisis in the basis of economic growth in this country. The retirement of the Boomers and the entering of Xers into midlife will have a strongly depressing effect on consumption until us materialistic Millies get old enough to counteract their frugality. The usual Keynesian tactic is "increase consumption", and the things we have done to stimulate consumption in this saeculum has been basically a "smash-with-a-hammer" approach, dump money into the economy and see what happens, that many not be effective with the generational alignment the way it is.

And in any case we need to find a way out of this consumeristic nightmare of an economy in which frugality is bad for growth.

Originally Posted by Odin

IMO this is a huge, fundamental even, crisis in the basis of economic growth in this country. The retirement of the Boomers and the entering of Xers into midlife will have a strongly depressing effect on consumption until us materialistic Millies get old enough to counteract their frugality. The usual Keynesian tactic is "increase consumption", and the things we have done to stimulate consumption in this saeculum has been basically a "smash-with-a-hammer" approach, dump money into the economy and see what happens, that many not be effective with the generational alignment the way it is.

And in any case we need to find a way out of this consumeristic nightmare of an economy in which frugality is bad for growth.

I don't know about you but this Crisis makes me become more frugal, just like my grandparents were after the Great Depression. Heck, my 1909 grandmother was still keeping her money in envelopes in her vanity drawers to the day she died, and always advocated frugality in everything. Although I will say that she did by the best QUALITY things later, but in the meanwhile she make due with cheap substitutes until enough was saved up to buy such an expense.

I plan on enacting a similar code of law... granted we ever make something of quality value ever again...

~Chas'88

Originally Posted by KaiserD2

the latest in financial innovation--buying up peoples' life insurance at a discount (people often sell it when they get sick) and bundling it and turning it into a security! These guys need new products to sell. The madness continues.

I saw that article too.
Most countries manufacture things.
We manufacture debt.
And the well of red ink is drying up.

Oh, the times, they are a-changing....From the sports news,Serena Williams caught flak not only from the ref, but from the fans, for not acting like a lady on the tennis court.

There have been times (before her time) when nobody would have expected her to.

And there have been times when the minute she didn't she'd have been kicked off and banned.

Quite frankly, I'm very glad to see those standards enforced again.

But something's happening here, isn't it?

Originally Posted by The Grey Badger

Oh, the times, they are a-changing....From the sports news,Serena Williams caught flak not only from the ref, but from the fans, for not acting like a lady on the tennis court.

There have been times (before her time) when nobody would have expected her to.

And there have been times when the minute she didn't she'd have been kicked off and banned.

Quite frankly, I'm very glad to see those standards enforced again.

But something's happening here, isn't it?

I believe that a lot sports fans and sports reporters are getting a little tired of her and sister's antics. I noticed during the US Open coverage that there was a lot more attention given to the young Millie girl Melanie Oudin. She seems to embody the Millie good girl image.

Originally Posted by The Grey Badger

Oh, the times, they are a-changing....From the sports news,Serena Williams caught flak not only from the ref, but from the fans, for not acting like a lady on the tennis court.

There have been times (before her time) when nobody would have expected her to.

And there have been times when the minute she didn't she'd have been kicked off and banned.

Quite frankly, I'm very glad to see those standards enforced again.

But something's happening here, isn't it?

I was watching some men's tennis today, and the commentator went on at length about how any sport worth it's salt ought to severely punish people who use bad language. On the other hand, one occasionally hears the sort of language common on NFL football fields. The players don't keep careful enough track of just where the microphones are on the sidelines. I fear I see Serena's adventure as a teapot sized tempest. Tennis is supposed to be a genteel sport. Perhaps they might be allowed to continue their traditions of civility. I just can't get myself all that worked up about it.

Frankly, I'd like to see more angles on the supposed foot fault.

Originally Posted by Bob Butler 54

I was watching some men's tennis today, and the commentator went on at length about how any sport worth it's salt ought to severely punish people who use bad language. On the other hand, one occasionally hears the sort of language common on NFL football fields. The players don't keep careful enough track of just where the microphones are on the sidelines. I fear I see Serena's adventure as a teapot sized tempest. Tennis is supposed to be a genteel sport. Perhaps they might be allowed to continue their traditions of civility. I just can't get myself all that worked up about it.

Frankly, I'd like to see more angles on the supposed foot fault.

Tennis is as much a culture as a sport. To be sure one can say much the same of professional wrestling...

Some traditions merit retention even in a 4T. Without them, far too much in life becomes absurd.

Compare today's California with the prior three turnings. California was a paradise in the minds of Americans. In the 1950s, 1960s, 1970s, 1980s, and the 1990s. If you showed people in those prior decades a picture of today's California (and the rest of America), they would think that they slipped into a Sliders wormhole.


Will California become America's first failed state?

Los Angeles, 2009: California may be the eighth largest economy in the world, but its state staff are being paid in IOUs, unemployment is at its highest in 70 years, and teachers are on hunger strike. So what has gone so catastrophically wrong?

California has a special place in the American psyche. It is the Golden State: a playground of the rich and famous with perfect weather. It symbolises a lifestyle of sunshine, swimming pools and the Hollywood dream factory.

But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kenneth Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."

Outside the Forum in Inglewood, near downtown Los Angeles, California has already failed. The scene is reminiscent of the fallout from Hurricane Katrina, as crowds of impoverished citizens stand or lie aimlessly on the hot tarmac of the centre's car park. It is 10am, and most have already been here for hours. They have come for free healthcare: a travelling medical and dental clinic has set up shop in the Forum (which usually hosts rock concerts) and thousands of the poor, the uninsured and the down-on-their-luck have driven for miles to be here.

The queue began forming at 1am. By 4am, the 1,500 spaces were already full and people were being turned away. On the floor of the Forum, root-canal surgeries are taking place. People are ferried in on cushions, hauled out of decrepit cars. Sitting propped up against a lamp post, waiting for her number to be called, is Debbie Tuua, 33. It is her birthday, but she has taken a day off work to bring her elderly parents to the Forum, and they have driven through the night to get here. They wait in a car as the heat of the day begins to rise. "It is awful for them, but what choice do we have?" Tuua says. "I have no other way to get care to them."

Yet California is currently cutting healthcare, slashing the "Healthy Families" programme that helped an estimated one million of its poorest children. Los Angeles now has a poverty rate of 20%. Other cities across the state, such as Fresno and Modesto, have jobless rates that rival Detroit's. In order to pass its state budget, California's government has had to agree to a deal that cuts billions of dollars from education and sacks 60,000 state employees. Some teachers have launched a hunger strike in protest. California's education system has become so poor so quickly that it is now effectively failing its future workforce. The percentage of 19-year-olds at college in the state dropped from 43% to 30% between 1996 and 2004, one of the highest falls ever recorded for any developed world economy. California's schools are ranked 47th out of 50 in the nation. Its government-issued bonds have been ranked just above "junk".

Some of the state's leading intellectuals believe this collapse is a disaster that will harm Californians for years to come. "It will take a while for this self-destructive behaviour to do its worst damage," says Robert Hass, a professor at Berkeley and a former US poet laureate, whose work has often been suffused with the imagery of the Californian way of life.

Now, incredibly, California, which has been a natural target for immigration throughout its history, is losing people. Between 2004 and 2008, half a million residents upped sticks and headed elsewhere. By 2010, California could lose a congressman because its population will have fallen so much – an astonishing prospect for a state that is currently the biggest single political entity in America. Neighbouring Nevada has launched a mocking campaign to entice businesses away, portraying Californian politicians as monkeys, and with a tag-line jingle that runs: "Kiss your assets goodbye!" You know you have a problem when Nevada – famed for nothing more than Las Vegas, casinos and desert – is laughing at you.

This matters, too. Much has been made globally of the problems of Ireland and Iceland. Yet California dwarfs both. It is the eighth largest economy in the world, with a population of 37 million. If it was an independent country it would be in the G8. And if it were a company, it would likely be declared bankrupt. That prospect might surprise many, but it does not come as news to Tuua, as she glances nervously into the warming sky, hoping her parents will not have to wait in the car through the heat of the day just to see a doctor. "It is so depressing. They both worked hard all their lives in this state and this is where they have ended up. It should not have to be this way," she says.

It is impossible not to be impressed by the physical presence of Arnold Schwarzenegger when he walks into a room. He may appear slightly smaller than you imagine, but he's just as powerful. This is, after all, the man who, before he was California's governor, was the Terminator and Conan the Barbarian.

But even Schwarzenegger is humbled by the scale of the crisis. At a press conference in Sacramento to announce the final passing of a state budget, which would include billions of dollars of cuts, the governor speaks in uncharacteristically pensive terms. "It is clear that we do not know yet what the future holds. We are still in troubled waters," he says quietly. He looks subdued, despite his sharp grey suit and bright pink tie.

Later, during a grilling by reporters, Schwarzenegger is asked an unusual question. As a gaggle of journalists begins to shout, one man's voice quickly silences the others. "Do you ever feel like you're watching the end of the California dream?" asks the reporter. It is clearly a personal matter for Schwarzenegger. After all, his life story has embodied it. He arrived virtually penniless from Austria, barely speaking English. He ended up a movie star, rich beyond his dreams, and finally governor, hanging Conan's prop sword in his office. Schwarzenegger answers thoughtfully and at length. He hails his own experience and ends with a passionate rallying call in his still thickly accented voice.

"There is people that sometimes suggest that the American dream, or the Californian dream, is evaporating. I think it's absolutely wrong. I think the Californian dream is as strong as ever," he says, mangling the grammar but not the sentiment.

Looking back, it is easy to see where Schwarzenegger's optimism sprung from. California has always been a special place, with its own idea of what could be achieved in life. There is no such thing as a British dream. Even within America, there is no Kansas dream or New Jersey dream. But for California the concept is natural. It has always been a place apart. It is of the American West, the destination point in a nation whose history has been marked by restless pioneers. It is the home of Hollywood, the nation's very own fantasy land. Getting on a bus or a train or a plane and heading out for California has been a regular trope in hundreds of books, movies, plays, and in the popular imagination. It has been writ large in the national psyche as free from the racial divisions of the American South and the traditions and reserve of New England. It was America's own America.

Michael Pollan, author of The Omnivore's Dilemma and now an adopted Californian, remembers arriving here from his native New England. "In New England you would have to know people for 10 years before they let you in their home," he says. "Here, when I took my son to his first play date, the mother invited me to a hot tub."

Michael Levine is a Hollywood mover and shaker, shaping PR for a stable of A-list clients that once included Michael Jackson. Levine arrived in California 32 years ago. "The concept of the Californian dream was a certain quality of life," he says. "It was experimentalism and creativity. California was a utopia."

Levine arrived at the end of the state's golden age, at a time when the dream seemed to have been transformed into reality. The 1950s and 60s had been boom-time in the American economy; jobs had been plentiful and development rapid. Unburdened by environmental concerns, Californian developers built vast suburbs beneath perpetually blue skies. Entire cities sprang from the desert, and orchards were paved over into playgrounds and shopping malls.

"They came here, they educated their kids, they had a pool and a house. That was the opportunity for a pretty broad section of society," says Joel Kotkin, an urbanist at Chapman University, in Orange County. This was what attracted immigrants in their millions, flocking to industries – especially defence and aviation – that seemed to promise jobs for life. But the newcomers were mistaken. Levine, among millions of others, does not think California is a utopia now. "California is going to take decades to fix," he says.

So where did it all wrong?

Few places embody the collapse of California as graphically as the city of Riverside. Dubbed "The Inland Empire", it is an area in the southern part of the state where the desert has been conquered by mile upon mile of housing developments, strip malls and four-lane freeways. The tidal wave of foreclosures and repossessions that burst the state's vastly inflated property bubble first washed ashore here. "We've been hit hard by foreclosures. You can see it everywhere," says political scientist Shaun Bowler, who has lived in California for 20 years after moving here from his native England. The impact of the crisis ranges from boarded-up homes to abandoned swimming pools that have become a breeding ground for mosquitoes. Bowler's sister, visiting from England, was recently taken to hospital suffering from an infected insect bite from such a pool. "You could say she was a victim of the foreclosure crisis, too," he jokes.

But it is no laughing matter. One in four American mortgages that are "under water", meaning they are worth more than the home itself, are in California. In the Central Valley town of Merced, house prices have crashed by 70%. Two Democrat politicians have asked for their districts to be declared disaster zones, because of the poor economic conditions caused by foreclosures. In one city near Riverside, a squatter's camp of newly homeless labourers sleeping in their vehicles has grown up in a supermarket car park – the local government has provided toilets and a mobile shower. In the Los Angeles suburb of Pacoima, one in nine homeowners are now in default on their mortgage, and the local priest, the Rev John Lasseigne, has garnered national headlines – swapping saving souls to saving houses, by negotiating directly with banks on behalf of his parishioners.

For some campaigners and advocates against suburban sprawl and car culture, it has been a bitter triumph. "Let the gloating begin!" says James Kunstler, author of The Long Emergency, a warning about the high cost of the suburban lifestyle. Others see the end of the housing boom as a man-made disaster akin to a mass hysteria, but with no redemption in sight. "If California was an experiment then it was an experiment of mass irresponsibility – and that has failed," says Michael Levine.

Nowhere is the economic cost of California's crisis writ larger than in the Central Valley town of Mendota, smack in the heart of a dusty landscape of flat, endless fields of fruit and vegetables. The town, which boldly terms itself "the cantaloup capital of the world", now has an unemployment rate of 38%. That is expected to rise above 50% as the harvest ends and labourers are laid off. City officials hold food giveaways every two weeks. More than 40% of the town's people live below the poverty level. Shops have shut, restaurants have closed, drugs and alcohol abuse have become a problem.

Standing behind the counter of his DVD and grocery store, former Mendota mayor Joseph Riofrio tells me it breaks his heart to watch the town sink into the mire. His father had built the store in the 1950s and constructed a solid middle-class life around it, to raise his family. Now Riofrio has stopped selling booze in a one-man bid to curb the social problems breaking out all around him.

"It is so bad, but it has now got to the point where we are getting used to it being like this," he says. Riofrio knows his father's achievements could not be replicated today. The state that once promised opportunities for working men and their families now promises only desperation. "He could not do what he did again. That chance does not exist now," Riofrio says.

Outside, in a shop that Riofrio's grandfather built, groups of unemployed men play pool for 25 cents a game. Near every one of the town's liquor stores others lie slumped on the pavements, drinking their sorrows away. Mendota is fighting for survival against heavy odds. The town of 7,000 souls has seen 2,000 people leave in the past two years. But amid the crisis there are a few sparks of hope for the future. California has long been an incubator of fresh ideas, many of which spread across the country. If America emerges from its crisis a greener, more economically and politically responsible nation, it is likely that renewal will have begun here. The clues to California's salvation – and perhaps even the country as a whole – are starting to emerge.

Take Anthony "Van" Jones, a man now in the vanguard of the movement to build a future green economy, creating millions of jobs, solving environmental problems and reducing climate change at a stroke. It is a beguiling vision and one that Jones conceived in the northern Californian city of Oakland. He began political life as an anti-poverty campaigner, but gradually combined that with environmentalism, believing that greening the economy could also revitalise it and lift up the poor. He founded Green for All as an advocacy group and published a best-selling book, The Green Collar Economy. Then Obama came to power and Jones got the call from the White House. In just a few years, his ideas had spread from the streets of Oakland to White House policy papers. Jones was later ousted from his role, but his ideas remain. Green jobs are at the forefront of Obama's ideas on both the economy and the environment.

Jones believes California will once more change itself, and then change the nation. "California remains a beacon of hope… This is a new time for a new direction to grow a new society and a new economy," Jones has said.

It is already happening. California may have sprawling development and awful smog, but it leads the way in environmental issues. Arnold Schwarzenegger was seen as a leading light, taking the state far ahead of the federal government on eco-issues. The number of solar panels in the state has risen from 500 a decade ago to more than 50,000 now. California generates twice as much energy from solar power as all the other US states combined. Its own government is starting to turn on the reckless sprawl that has marked the state's development.

California's attorney-general, Jerry Brown, recently sued one county government for not paying enough attention to global warming when it came to urban planning. Even those, like Kotkin, who are sceptical about the end of suburbia, think California will develop a new model for modern living: comfortable, yes, but more modest and eco-friendly. Kotkin, who is writing an eagerly anticipated book about what America will look like in 2050, thinks much of it will still resemble the bedrock of the Californian dream: sturdy, wholesome suburbs for all – just done more responsibly. "We will still live in suburbs. You work with the society you have got. The question is how we make them more sustainable," he says.

Even the way America eats is being changed in California. Every freeway may be lined with fast-food outlets, but California is also the state of Alice Waters, the guru of the slow-food movement, who inspired Michelle Obama to plant a vegetable garden in the White House. She thinks the state is changing its values. "The crisis is bringing us back to our senses. We had adopted a fast and easy way of living, but we are moving away from that now," she says.

There is hope in politics, too. There is a growing movement to call for a constitutional convention that could redraw the way the state is governed. It could change how the state passes budgets and make the political system more open, recreating the lost middle ground. Recently, the powerful mayor of Los Angeles, Antonio Villaraigosa, signed on to the idea. Gerrymandering, too, is set to take a hit. Next year Schwarzenegger will take steps to redraw some districts to make them more competitive, breaking the stranglehold of party politics. He wants district boundaries to be drawn up by impartial judges, not politicians. In previous times that would have been the equivalent of a turkey voting for Christmas. But now the bold move is seen for what it is: a necessary step to change things. And there is no denying that innovation is something that California does well.

Even in the most deprived corners of the state there is a sense that things can still turn around. California has always been able to reinvent itself, and some of its most hardcore critics still like the idea of it having a "dream".

"I believe in California. It pains me at the moment to see it where it is, but I still believe in it," said Michael Levine.

Perhaps more surprisingly, a fellow believer is to be found in Mendota in the shape of Joseph Riofrio. His shop operates as a sort of informal meeting place for the town. People drop in to chat, to get advice, or to buy a cold soft drink to relieve the unrelenting heat outside. The people are poor, many of them out of work, often hiring a bunch of DVDs as a cheap way of passing the time. But Riofrio sees them as a community, one that he grew up in. He is proud of his town and determined to stick it out. "This is a good place to live," he says. "I want to be here when it turns around." He is talking of the stricken town outside. But he could be describing the whole state.

One of the top political issues here in this 3T-4T cusp is the backlash finally being here regarding the ever-widening gap between rich and poor. I read a story once which described five major causes for this trend. They are:

Changing job skill qualifications
More competition between men and women for jobs
More immigration
More cost-consciousness by companies
The general congesting created by the baby boom, with more people competing for jobs, thus holding down wages.

I bet most of you can think of some attributes which were left out. I can think of one big one, and that is the ever-escalating abundance of computers and robotics, which have had a substantial impact in reducing the number of jobs available to those who lack higher education and/or specialized training.

The titled of this post was taken from a book written by Kevin Phillips back around 1990, which means that the awareness of this trend has been obvious now for two decades or more. BTW, Mr. Phillips followed this up with a book titled "Boiling Point" which dealt with the decline of middle class prosperity. Makes you wonder why it took so long for the backlash to this trend to come to the forefront.

I think Phillips's more recent work is more relevant to the issue at hand, in which he's been focused on the "financialization" of the U.S. economy; i.e., we no longer make stuff, we just move money around. He's chronicled one bailout after another that's screwed the taxpayer and benefited Wall Street going back to the early 80s. The chart he had in "American Theocracy" that he updated in "Bad Money" was truly an eye-opener.

And actually, he could have cited examples going back to 1970, like the bailouts of Penn Central and Lockheed. Heck, even the Panama Canal Treaty was a backdoor handout of taxpayer money to Wall Street -- foreign aid handed to Panama was immediately used to pay off Panama's loans.

In 1970, it was still possible to support a middle-class family on one income. by 1980, it took two incomes. By 1990, it took the added step of cutting back on savings. By 2000, it required actively increasing the family's debt load. 2010 is going to be the point of no return.

I don't mean to downplay the factors you cite. But I think they're small potatoes in light of the bigger picture.

Originally Posted by overture1928

In 1970, it was still possible to support a middle-class family on one income. by 1980, it took two incomes. By 1990, it took the added step of cutting back on savings. By 2000, it required actively increasing the family's debt load. 2010 is going to be the point of no return.

Hm. It might be interesting to note that the philosophies of the Turnings themselves contributed to this dilemma.

Let me first set the disclaimer that, yes, there are without question other factors that led to the financial strain on today's families.

But, during the High, the definition of middle class and the expectations those in the middle class had for their own standard of living was, arguably, far different than it was during the Unraveling. The Awakening reprioritized the self, and one unfortunate outcome was that there was an increased sense of entitlement. I'll risk saying that, in the '90s, when the political and corporate governing bodies were filled with the youth of the self-promoting Awakening, the overarching financial and material mantras were "I deserve this." "I won't settle." "Nothing but the best." Those are hard philosophies to feed without making either drastic financial choices (mounting debt) or unfortunate rationalizations (both parents must work and limit savings and accrue mounting debt if we are to meet these standards.)

I'm not trying to brush with broad strokes. Again, there are many families who are truly victims of an irresponsible economic culture. But I think it is fair to acknowledge that G.I.'s defined the American Dream with a more limited material criteria than we do, generally, as a culture today.

Originally Posted by BookishXer

But, during the High, the definition of middle class and the expectations those in the middle class had for their own standard of living was, arguably, far different than it was during the Unraveling.

Valid point. The "typical suburban home" of yesteryear was a lot smaller than today. Beaver and Wally Cleaver shared a bedroom circa 1959. By 2006, each kid practically had to have his own little suite.

Originally Posted by BookishXer

I'll risk saying that, in the '90s, when the political and corporate governing bodies were filled with the youth of the self-promoting Awakening, the overarching financial and material mantras were "I deserve this." "I won't settle." "Nothing but the best."

True. But as I like to point out, the guys ultimately setting the pace for those political and corporate governing bodies were, of all things, two Silents -- Alan Greenspan and Robert Rubin. (The most recent edition of PBS Frontline, all about the battle over derivatives at that time, only reinforces my take on this.) Larry Summers (Boomer) and TurboTax Timmy Geithner (first-year Xer like Obama) played important supporting roles.

Originally Posted by overture1928

..the guys ultimately setting the pace for those political and corporate governing bodies were, of all things, two Silents -- Alan Greenspan and Robert Rubin. (The most recent edition of PBS Frontline, all about the battle over derivatives at that time, only reinforces my take on this.) Larry Summers (Boomer) and TurboTax Timmy Geithner (first-year Xer like Obama) played important supporting roles.

True. Rubin would have been in his 20's in 1964, but Greenspan's nearly a G.I. I should have worded that differently:

'The Awakening reprioritized the self, which led to an Unraveling where the overarching financial and material mantras were "I deserve this." "I won't settle." "Nothing but the best." With the youth and young adults of the self-promoting Awakening filling corporate and political America, they were more than just noisy radicals, they were our decision-makers.'

Greenspan isn't from either generation that stereotypically enmeshed itself in the Awakening's movements, but, in a chicken-and-egg debate, I wonder if his policies had legs because we were a society eager for them, or if, because the economic climate was more demanding, he was trying to respond accordingly in the ways he thought were best. Maybe a little of both.

Greenspan's a hard case on any number of levels. Late in the High and well into the Awakening, he was hanging out with Ayn Rand. (Indeed, he was one just a handful of people from her inner circle who did not have a falling-out with her.)

A lot of people who don't know better think Rand's values informed his actions as Fed chief. Not so. Early in the Awakening, he was an ardent opponent of central banking specifically because it transferred wealth by force and fraud to the moneyed elites.

Why he shifted his views later in the Awakening, becoming the world's most important central banker during the Unraveling, no one has adequately explained, least of all Greenspan himself.

Originally Posted by overture1928

Greenspan's a hard case on any number of levels. Late in the High and well into the Awakening, he was hanging out with Ayn Rand. (Indeed, he was one just a handful of people from her inner circle who did not have a falling-out with her.)

A lot of people who don't know better think Rand's values informed his actions as Fed chief. Not so. Early in the Awakening, he was an ardent opponent of central banking specifically because it transferred wealth by force and fraud to the moneyed elites.

Why he shifted his views later in the Awakening, becoming the world's most important central banker during the Unraveling, no one has adequately explained, least of all Greenspan himself.

PBS's Frontline episode, The Warning, gives at least a partial account. When he was first given high level jobs in Treasury, he had to swear to uphold laws which were in opposition to his internal beliefs. As a central banker, he did not have the authority to dismantle central banking. However, he was still a great believer in free markets. He absolutely minimized the degree of regulation and fraud enforcement taking place.

The Warning centers around his conflict with a woman who wanted to regulate the derivatives market. At the end of the episode, Greenspan ends up testifying before congress that his belief in free markets was mistaken, that a free market system cold not prevent and should not be counted on to prevent the collapses that fell out of the recent derivatives market failures.

This gets to the crux of the matter: In a truly free market, bad bets result in bankruptcy. But under the present system, bad bets result in bailout. It's the privatization of profit and socialization of risk, to borrow James Grant's phrase. Without the implicit promise of bailout, only the most reckless players would take on the kind of risk that comes with derivatives. But with that implicit promise, everybody jumps in.

Somewhere along the line, Greenspan decided this arrangement was a good thing and he cast his lot with this crowd. Why remains a mystery, a mystery that only deepens when he said within the last couple of years that he stands by his 1966 essay "Gold and Economic Freedom," which contradicts nearly everything he did from the early 70s onward.

Originally Posted by overture1928

This gets to the crux of the matter: In a truly free market, bad bets result in bankruptcy. But under the present system, bad bets result in bailout. It's the privatization of profit and socialization of risk, to borrow James Grant's phrase.

I think this really represents the identity crisis we've had as a nation for so many years. Are we socialist or capitalist? How much can we socialize and still maintain our capitalist title?

Originally Posted by overture1928

Valid point. The "typical suburban home" of yesteryear was a lot smaller than today. Beaver and Wally Cleaver shared a bedroom circa 1959. By 2006, each kid practically had to have his own little suite.



True. But as I like to point out, the guys ultimately setting the pace for those political and corporate governing bodies were, of all things, two Silents -- Alan Greenspan and Robert Rubin. (The most recent edition of PBS Frontline, all about the battle over derivatives at that time, only reinforces my take on this.) Larry Summers (Boomer) and TurboTax Timmy Geithner (first-year Xer like Obama) played important supporting roles.

Yes. I have a single friend who thinks my 1100 square foot 2-bedroom home is a "cute little starter home" that would be too small for her. I shared a bedroom with my sister. As we were total opposites in personality, that meant we didn't have to watch the news or read science fiction to get a taste of World War III - we couldn't avoid it!

It has become fashionable in the last year to dismiss foreign aspects of the crisis as unimportant. The Bush 43 years might not be part of the crisis proper at all. Since the housing bubble collapse, it has all become about maintaining the life style to which we have been accustomed. The core issue is to return the consumer based economy to the levels of the unraveling. This methods being used to achieve this ends are being attacked from the right as being fascist, and the left as pandering too much to corporatist interests. I'll attack it as being an 'On to Richmond' attempt to maintain the status quo rather than instigate a real transformation.

For decades I had been attempting to define the crisis succinctly. It seem we have too many issues, too many catalysts, and no unity of vision. The goal would be a sound byte size group of themes that would peg the crisis. I did come up with something. I tend to repeat the mantra from time to time. It seems time to repeat it again.

With limited resources (especially energy) and increasing population, we are approaching Malthusian limits. The result in many parts of the world is poverty, economic problems, including division of wealth both within cultures and between countries. This has been leading to ethnic strife and other security related problems. The ultimate solution requires an ecological perspective. Making limited resources do for an ever increasing population is the core problem which leads to the rest. However, we can't address one type of problem alone. The solution will have to be comprehensive. We must address ecological, resource, economic, ethnic, political and security problems alike.

The New York Times reports that a Thirsty Plant Dries Out Yemen. The article speaks of increasing population, ancient traditional water managment methods abandoned, deep wells draining the aquifer, and climate change effecting rain patterns. Al Qaida is rebuilding its presence, and ethnic strife is increasing. Poverty is increasing. With cheap imported food available, the primary cash crop is a water thirsty narcotic plant. As is usual with narcotics, there are crime problems.

As a bit of background, for a thousand years a huge ancient dam was central to the civilization of Yemen. It collapsed in the 6th Century AD.

For discussion purposes, the article ends...

Mr. Amer, the farmer based here, proudly showed visitors his efforts to irrigate fruit and tomato fields using rubber tubes, instead of just funneling it through earthen ditches that allow most of the water to evaporate unused. Little hoses spray the crops with water instead of wastefully soaking them.

But he also pointed out two local wells where the water is dropping at the astonishing rate of almost 60 feet a year, causing the land to subside. Nearby, sinkholes in the arid soil of his property are growing longer and deeper every year.

“We have been suffering for years from this,” he said, gesturing at a cast-off drill rig that broke after going down too deep into the earth.

The Yemeni engineers working on the World Bank project concede they have had tremendous difficulty convincing other farmers — and even government agencies — to take their efforts seriously.

“There is no coordination with other parts of the government, even after we explain the dangers,” said Ali Hassan Awad. “Prosecutors don’t understand that drilling is a serious problem.”

Mr. Eryani, the water minister, takes the long view. Yemen has suffered ecological crises before and survived. The collapse of the Marib dam, for instance, led to a famine that pushed vast numbers of people to migrate abroad, and their descendants are now scattered across the Middle East.

“But that was before national borders were established,” Mr. Eryani added. “If we face a similar catastrophe now, who will allow us to move?”

I am not convinced that the housing bubble collapse was the last catalyst. I am not convinced that the foreign security lessons we learned during the Bush 43 administration were unimportant. And while the situation in Yemen is alarming, it is not unique. One can find similar problems in Africa and elsewhere, mismatches between populations and resources leading to poverty and strife.

I haven't sounded a catalyst warning since a category 5 storm called Katrina was reported heading towards New Orleans. I sounded that warning as I had read news reports that had predicted what might happen should such a storm hit. I didn't guess in advance the nature of the political fallout, but I guessed the storm would have an impact notable to the cycles.

It seems time to sound a preliminary catalyst warning. Yemen might be worth watching.

I hope y'all enjoy the economic phase of the crisis.

I agree with Mr. Butler that there will be very serious crises in other parts of the world. The question is to what extent they will draw us and other advanced countries in.

For about a year and a half now I've been intensely studying the US in 1940-1, and you simply can't compare that international environment to this one. There were seven independent nations capable of putting huge armies in the field and moving them large distances: Japan, China, the Soviets, Germany, France, Britain and the US. They fought one another, and occupied much of what we call the Third World (which was much smaller, relative to the First World, than it is now.) Now there are really no such nations. The United States had to strain every resource to keep about 150,000 men in Iraq--where they had very little effect on what was happening. No other country could come close to such an involvement.

I have to believe all this is a good thing. Civilization advances more in eras where military power is smaller and does less. But it means that the richer nations simply won't be able to affect crises in heavily populated parts of the Third World. The question is whether they realize that. We still assume that we can, and must, fix any problem in the world, and the Europeans assume that we will do it for them. This can't go on.

This may be 4T or it may be 2T, but it sure ain't 3T:

http://www.cnn.com/2009/US/11/20/cal...tion.protests/

Originally Posted by KaiserD2

I agree with Mr. Butler that there will be very serious crises in other parts of the world. The question is to what extent they will draw us and other advanced countries in.

For about a year and a half now I've been intensely studying the US in 1940-1, and you simply can't compare that international environment to this one. There were seven independent nations capable of putting huge armies in the field and moving them large distances: Japan, China, the Soviets, Germany, France, Britain and the US. They fought one another, and occupied much of what we call the Third World (which was much smaller, relative to the First World, than it is now.) Now there are really no such nations. The United States had to strain every resource to keep about 150,000 men in Iraq--where they had very little effect on what was happening. No other country could come close to such an involvement.

I have to believe all this is a good thing. Civilization advances more in eras where military power is smaller and does less. But it means that the richer nations simply won't be able to affect crises in heavily populated parts of the Third World. The question is whether they realize that. We still assume that we can, and must, fix any problem in the world, and the Europeans assume that we will do it for them. This can't go on.

Hopefully the USA will have finally learned this lesson with Iraq/Afghanistan.

There are two big trends underway globally:

1. One trend favors the decentralization of power, rather than the concentration of power.

2. The other trend - in terms of military power - favors the Defense over the Offense.


The implications are:

1. A defensive Grand Strategy is more workable than an aggressive one.

2. As it becomes harder to impose one's will - in a world of global issues - genuine international cooperation becomes imperative.

Originally Posted by Brian Rush

This may be 4T or it may be 2T, but it sure ain't 3T:

http://www.cnn.com/2009/US/11/20/cal...tion.protests/

I was just about to post that. That's a blast from the past!

Originally Posted by Brian Rush

This may be 4T or it may be 2T, but it sure ain't 3T:

http://www.cnn.com/2009/US/11/20/cal...tion.protests/

A 2T incident would be motivated by things I don't quite understand since I wasn't around, things like a generally stifling administration, etc. The motivations were mostly cultural.

A 4T incident is motivated by being screwed over financially. Of course it's a 4T incident.

I've been thinking about this a lot. It's a bunch of Millies getting screwed over as the bad policies of older generations catch up to society. I'd be pissed as hell, too. I wonder what the prognosis of this is.

Yes, it's 4T, Alex, I was joking. The only connection is the tactic, which was last used by young Boomers in the '60s.

Yeah, big difference between this and the Free Speech Movement for example. I just thought it was kind of funny.