Blowback Comes in All Forms

BLOWBACK: Unforeseen consequences and events that blow up in one's face, like a faulty weapon.

I'm intrigued when a term that means one thing, is re-tooled to mean another with perfect pitch. Blowback is such a term. Originally meant to describe, "a process in which gases expand or travel in a direction opposite the usual one, esp. through escape of pressure or delayed combustion." Later, it was described by intelligence services as the unintended, adverse result of political or covert action (see Soviet-Afghan War and read Charlie Wilson's War). Why paraphrase it here? Because it came to me watching last night's second Presidential Debate--specifically when taxes were brought up.

In this case, pertaining to corporate taxes, many fail to see what is obvious to those who monitor the national debt. When Bush lowered taxes for corporations and the richest (his first major economic initiative in 2001) in the U.S., it started the biggest contribution to raising our debt--after two terms, he just about doubled the debt, now 10 trillion as of September 30. 2008. All of this to put us on track with the trickle down theory, again. Inequity widened under this policy (those that didn't need the help got richer, the middle class took on more burden, and those that really needed it, got none). Because of this, our gross national debt compared to GNP (how rich we are) has reached its lowest level.

Back to the debate, the problems I have with the Republican candidate are these:

1. he wants to continue the tax cuts of Bush (thus making us poorer)
2. wants to continue a war that was started on false premises (continuing our military outlay in blood and treasure)
3. believed in de-regulation of Wall Street (see McCain's economic advisor, Phil Gramm)
4. wants to fix the economy, but is blind to the impact of the first three items here

I'm sure those in the current lame-duck administration didn't want to mortgage the future of American citizens for years to come and wreck the global economy (along with the same Wall Street they hoped to benefit). But, that was the consequence of their fiscal policies. Blowback. I do not know about them, but when most people get stuck in a hole, the smart ones stop digging! McCain does not seem to want to stop digging. Of course, their wonderful counter-argument is to say, "if you raise taxes on the wealthy, they'll cut jobs." Really? Then why was it, during the Clinton years (which had a higher tax rate on corporations and the richest compared to now), we had balanced budgets, high productivity with low unemployment, an expanding middle class, lowering debt, and a budget surplus?

"There are better ways forward."

A Bad Bank Rescue

by Sebastian Mallaby

The more I listen to the Sunday news talk shows, and read the (web) news articles, the more it sounds like we've been here, before. The hurry placed on the Congress to approve the proposed bail out of financial institutions, without much examination or proposed changes, sounds like a another "mushroom cloud" threat and reaction. And we now know the results of that endeavor.

The Post Op-Ed columnist, Sebastian Mallaby, brings some sense into our current situation and mentions the other, more viable, alternatives that isn't getting much attention. And, puts the proper historical perspective to the proponents comparison with the clean up of the savings and loan crisis. The key segment:

Within hours of the Treasury announcement Friday, economists had proposed preferable alternatives. Their core insight is that it is better to boost the banking system by increasing its capital than by reducing its loans. Given a fatter capital cushion, banks would have time to dispose of the bad loans in an orderly fashion. Taxpayers would be spared the experience of wandering into a bad-loan bazaar and being ripped off by every merchant.

Now, whether cooler heads will decide this one is the question. Again, we're being sold fear, and the need to act quickly, over scrutinizing what we're buying and ignoring more bad policy from an administration with a long record of proposing such.

Need 9/11-like Commission? Not Really...

Regardless what the Republican Presidential candidate says, we don't need a 9/11-like commission to get to the bottom of the current financial crisis. It's pretty clear what's driving this meltdown:

How We Got Here: It's Housing, Stupid

And, there's plenty of blame to go around:

Market Crisis: Where Were the Regulators?

Key quote here is:

Both Republicans and Democrats in Washington ended up "supporting deregulation, even as newly minted but little-understood products like derivatives proliferated."

Add to this our government's inclination (and bad habit) of printing money to try to pay for things. Our balance sheets are getting trashed--plain and simple. The dollar continues to lose value. And, it all comes down to bad policies by our government. Unfortunately, we (the taxpayers) are going to have to pay for this. Great... Sounds like the answer to the question: How to move from a government surplus to a humongous national debt and global economic crisis in eight years, or less.