Words of Advice:

"If Something Seems To Be Too Good To Be True, It's Best To Shoot It, Just In Case." -- Fiona Glenanne

"Flying the Airplane is More Important than Radioing Your Plight to a Person on the Ground
Who is Incapable of Understanding or Doing Anything About It." -- Unknown

“Never argue with stupid people, they will drag you down to their level
and then beat you with experience.” -- Mark Twain

"Stay Strapped or Get Clapped." -- probably not Mr. Rogers

"Let’s eat all of these people!” — Venom

"Eck!" -- George the Cat

Monday, December 22, 2008

The Republican Ponzi Economy

Every Republican president since Gerald Ford has run the government like a giant Ponzi scheme: Cut taxes for the wealthy, ramp up spending and hope to Christ that they are long gone by the time it comes to pay the bill.

Probably the most irresponsible of the three presidents from the party of Hoover has been George W. Bush, and mainly because he is such an ideological idiot that he has no real clue what his party has wrought.

The Republicans have done their level best to replace an economy based on manufacturing to an economy based on a giant Ponzi scheme, for that is all that the "service economy" and the financial sector is: A swindle.

It is fairly easy to understand manufacturing: People turn raw materials into components and then assemble to components into usable things. The money earned from making things such as washing machines and cars gets paid in part, to the workers, who then go out and buy other things. The factories add value; a car is worth considerably more than a ton of steel and a few hundred pounds of plastic, copper and rubber.

The financial industry, though, is basically a swindle. You take a mortgage on a house, bundle it together with a lot of other mortgages and those become securities, which are traded back and forth and insured against and so on and so forth. But it is really just a lot of paper chasing other paper, for no real work is done. Nothing is created, except more and more paper that is based on nothing at all. A number of people make a shitload of money trading that paper back and forth, raising the value of it, but there is no real "value" to it. It has no practical utility.

I suspect what has happened over the last few months is a lot of people are starting to ask a very simple question: "What is this shit really worth?" The answer is: "Not much."

All Ponzi schemes fail, eventually. Compared to the one that has been run by the financial services schemers, with the connivance of a lot of politicians, both Republican and Democratic (but far more Republican), Bernie Madoff, with his $50 billion scheme, was a rank amateur.

If we are going to get out of this mess, we have to do a few things. First off, as a nation, we have to rip up our credit cards. Other than a loan for a car or a mortgage for a house, if you can't afford to go pay cold cash for something, you have no business buying it (true emergencies notwithstanding).

Second, start putting something aside. Even if it is only five bucks a week, start putting something aside.

Third, we have to get our national economy back to making things, to adding value to things, and away from the paper shell game.

Fourth, we cannot afford to spend the way we have been doing on defense. Between the budgeted costs and the extra-budget costs and the hidden costs, we are edging close to a trillion dollars a year. This is going to be a hard item to get under control for domestic political reasons. But we have to. We have to stop buying weapons and shit just because some congressman wants to protect a plant in his district.

There will have to be some hard choices, as there is a point where one cannot cut without sacrificing the knowledge base to make things and to employ them in wartime. But we sure as hell do not need more C-130s, C-17s or F-22s. We may have to kill the MV-22 and go back to helicopters. The Navy is probably going to have to give up the Zumwalt DDG. We are going to have to go back to fighting wars only when it is a true national emergency, not because a bunch of chickenhawks at the Heritage Foundation or the American Enterprise Institute have wet-dreams of creating an empire.

Fifth, we need to increase the minimum age to collect Social Security.

Sixth, taxes need to be restored to a progressive basis where the wealthy pay a higher percentage than does the middle class. We need to tilt the balance away from favoring those whose money works for them. Slashing capital gains taxes favors only the truly wealthy, which is why the party of Hoover supports them.

Seventh, bring back inheritance taxes to pre-Bush levels. There is nothing wrong with making money, but there is something inherently inequitable to a life of high privilege because one won the Lucky Sperm Lottery.

Eighth, we need to plan for the future and part of that is making sure we don't wreck our environment. Fossil fuel use is nothing more than squandering our energy inheritance. We need to live far more lightly on the land than we do now.

In all sectors, whether it is national security, energy independence, having a sustainable economy or protecting our environment, the Republicans have wreaked havoc. Democrats, while tut-tutting about it, have offered very little in plans to change that.

We had better take these problems in hand and start making some real progress.

We do not have a lot of time left. There is a lot that has to be fixed.

If we do not get a move on, then the United States of America is going to lose its primacy in the world, maybe not tomorrow or in the next year, but soon and forever.


One Fly said...

If only it could be.

I'll go along with the SS thing. Move up retirement age a couple years but give me the full amount with health benefits.

BadTux said...

One thing I'll point out: Democrats have not only tut-tutted, but *helped* the Republicans. Bill Clinton was fond of pushing Internet bubble frothiness as the solution to the decaying industrial infrastructure, while at the same time signing NAFTA to export jobs to Mexico and Canada. (Albeit NAFTA was negotiated by George H.W. Bush).

Point being, we're being f*cked by both sides. The only difference at this point is that the Democrats know that if they keep f*cking us too hard, bad sh*t is gonna happen. Think Iraq-style bad sh*t, where even soldiers with tanks and machine guns can't reliably protect the elite in their Green Zone fortified enclaves. The Rethugs, on the other hand, still haven't figured out the limits of military power...

- Badtux the F*cked Penguin

Justin Buist said...

I'll go along with the SS thing.

How about we just start phasing out that Ponzi scheme? It's unsustainable. Bumping up the age just staves off the inevitable for a little while longer.

BadTux said...

Social Security isn't a Ponzi scheme. It's an insurance scheme. Now, you might think that your insurance payments go into some vault somewhere and are saved until you have an accident and need them. No. That isn't how it works. Your insurance payments go to pay for *other* people's claims. And in turn, if you ever have a claim, you are getting other people's insurance payments.

All insurance -- Social Security or otherwise -- is a bet that only a small percentage of the population paying into the insurance fund will file a claim in any given year. If the percentage rises, you increase the premiums or you decrease the coverage (i.e., raise the SSI tax or raise the retirement age). Or both. But insurance, unlike Ponzi schemes, is sustainable forever, because it's based on the simple demographic that the number of people paying in will always be fewer than the number of people drawing out. The only thing that could change this is if suddenly the population of non-retirees plumetted, or suddenly insurance payments were diverted to some other place -- like into "private retirement accounts".

Now, the question is, is Social Security a *good bet*? That is, are you better off without paying into this insurance fund? The answer is, "it's a wash". For people who die young, their Social Security payments are useless, just as for someone who never has an accident, his car insurance payments are useless. On the other hand, the ramifications of *not* having insurance if you have a car accident, or get old, are pretty dire.

In any event: No, Social Security is *NOT* a Ponzi scheme. It is insurance. Please, please, please look up your terms before you make an idiot of yourself. The term "Ponzi scheme" has a certain definition, a definition that is nothing like Social Security. Ignoring that definition either makes you dishonest, an idiot, or both.

- Badtux the Insurance Penguin

Comrade Misfit said...

Charles Schumer was another one who pushed the primacy of the financial services "industry."

PhysioProf said...

The Democratic Party needs to be dragged kicking and screaming to the left, or we are just as fucked with them as with the Republicans.