Where is J. Q. Public???

Obama’s economic advisory team Robert Rubin, Larry Summers, Laura Tyson, who served as Clinton's top economic adviser; former Fed Vice Chairman Roger Ferguson; Time Warner Inc. Chairman Richard Parsons; former Securities and Exchange Commission chairman William Donaldson and Xerox Corp. Chief Executive Officer Anne Mulcahy. Google Inc. CEO Eric Schmidt, Michigan Governor Jennifer Granholm and Roel Campos, an ex-SEC commissioner, and Warren Buffett are also on the advisory board.

There is not one union leader, not one university economics professor such as the over 200 who sent a petition speaking out against last month’s bail out.  Does Obama expect those who have created the collapse to find a cure that will benefit the common people first?  They will propose moves that benefit banking and manufacturing first.  It is more trickle-down economics.  He might as well had gone to the Economic Roundtable and asked what should be done. 

The problem is at the time, the business community, and mainly the financial sector has got us in this mess by wanting to expand M3.  Their fix is more of the same expanding of M3, viz. more debt.  It is them who has abused labor by flooding the nation will illegal workers, raised the retirement age and cut Social Security, cut pension plans, by having wage fall in comparison to buying power, cut job benefits,  These advisor are part of a group that opposed the well being of workers for the sake of cutting costs.  Where is labor on Obama’s Advisory Team?

Pumping money into the system is not enough, for the principle cause is not the housing bubble, but rather a combination of federal debt, consumer debt, trade deficit, falling wages, and rising unemployment because of the outsourcing of jobs.  Even if housing had simply kept pace with inflation, there sill would be a crash—just further down the road.  Alan Greenspan repeated warned the President and Congress about fiscal responsibility—and he is one of them, a neoliberal.  A $10 trillion dollar fed debt is unsustainable.  At $5 trillion in 01, Greenspan started to warn the irresponsible implementers of Reaganomics of the consequences.  The second unstable account is that of consumer debt, over $13 trillion.  Then there is the trade deficit, over $50 billion per month.  The final big part of the picture is employment and falling wages.  With a real inflation rate currently over 10% buying power of the consumer has been falling.  Moreover millions of jobs have been lost to outsourcing, including many of the better paying ones in pharmaceutical, auto, and heavy equipment sectors.  It is 1929 all over again.  The stock market crash was then a reaction to fundamental economic instability, and today history is repeating itself.  Without basic changes what we are entering will continue.

This is the great rip off.  Productivity has constantly risen over the last 35 years, over 60%, yet we are getting less.  This is a failure of our capitalist system to distribute the increased productivity to those responsible for it.  Because the globalizers are pigs at the trough (title of Arianna Huffington’s book), they have brought about a collapse like the robber barons did in the 1920s.    

Their solution, giving more money to the pigs, is another rip off.  The alternative of giving it to homeowners not only is more financially effective, but it also reduces hardship; hardship that was brought on by loans too good to turn away.  It was like having a rich uncle cosign and cover the up-front money.  Get a house for free, if the market goes up and stays up, you can keep the gain.  If it goes down your rich uncle is on the hook.  In this case the rich uncle is the financial institutions.  They now have gone to the feds to bail them out.  And the feds do not want an implosion like that of banking in 1933.   

The foundation of a nation’s wealth is built upon two things:  what the workers are producing and its natural resources.  All wealth comes from labor.  It is the common worker who support through food and manufactured goods our huge structure of financing including all those employed therein.

There is a need for financing; it makes it possible for a young couple to buy a home and vehicle, and a factory to expand its facility.  But in our country the financial institutions have been the largest and most profitable sector of our economy.  They’ve grown principally upon fractional reserve banking, through meeting the reserve assets requirement of 10% (a billion dollars gets 10).    

The ratio of tangible assets to paper has reached the point of instability.  With housing the price was well above the replacement value of the homes.  To print and loan more paper is not to address the problem.  Printing and loaning it out has a price, just like buying with credit cards does.  At some point the max is reached, and then it collapses. 

Part of the problem is a dwindling manufacturing base.  Another part is falling wages when compared to the cost of living.  A third part is the growth of the financial sector and the interest payments that support it.  At our zenith, the U.S. was both an exporter nation and a nation that had a positive balance of payments.  It had a strong labor movement and tariffs to protect our standard of living.  It was not a debtor nation.  Gradually the financial sector has changed the way we do business. 

            Now we are likely going to live through a depression.  It took 3 years and 4 months from the stock market crash to the run on banks (January 1933).  Where will we be in January of 2012?  I fear that if the business community dictates the solutions, history will repeat itself. 

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