Ireland and our political economy

Whalen recommended this very excellent piece on Ireland in the NYRB, it really should be read. It contains a couple of very important points and thoughts that are as relevant for the United States as for Ireland. First, it gives a great description of the distorting power of bubbles, in this case the Irish housing bubble. The piece gives these figures,

Many counties have more ghost estates than Leitrim—Cork has ninety of them—but Leitrim emerges as Ireland’s champion when empty houses are compared to the number of the local population. NIRSA’s director Rob Kitchin calculates that 2,945 homes were built in Leitrim between 2006 and 2009 when the growth trend suggested that only 588 would be needed—an oversupply of around 400 percent.

In 2006, at the height of the boom, construction accounted for almost a quarter of Ireland’s GDP and occupied a fifth of the workforce...Bank lending for construction and real estate rose from €5.5 billion in 1999 to €96.2 billion in 2007—an increase of 1,730 percent—while house prices doubled in the six years to 2006.

That folks is a bubble. It distorts the economy, and, depending on its size, can do so on a massive scale. Thus after it pops, no amount of money poured into the system is going to reflate it. In a related note, the Case-Shiller index released today, shows US housing prices continuing to fall across the country.

Secondly, the piece does a nice job explaining the culpability and complicity of the Irish political class in creating the bubble. Now, this doesn't in anyway absolve the fraudulent actions of the bankers, but it does show again, despite the protestations of the Greenspans, Bernankes, Summmers, Geithners, Clintons, and Obamas, we know enough about money to prevent bubbles. It takes an active and forceful regulatory environment, limits on size and scope, enforcement against fraud, and limits on leverage.

Finally, the piece concludes with just an excellent paragraph on what wrong with the Irish political economy, but could just as well be applied to the US:

It was a little too good to be true that Ireland could go from the pre-modern to the post-modern without ever fully creating the structures and habits of a modern democracy. Large chunks of classic democracy were missing—the shift from religious authority to public and civic morality; the idea that the state should operate objectively and impersonally rather than as a private network of mutual obligations; the notion of the law as a universal and neutral check on everyone’s behaviour, whatever their status…. Plonking a hyper-charged globalised economy on top of such an underdeveloped system of political governance and public morality was always likely to create an unbearable strain.

While, you can argue one way or other about whether the Irish ever developed a rule of law, a de-clanning of politics, and a vibrant public and civic morality, there is no doubt the US at some point had moved in these directions. It also can be said, the plonking a hyper-charged globalised economy on top of the US political economy ripped asunder all these things. It has not just been labor arbitraged by corporate globalization, but government regulation, the rule of law, and maybe most important of all, public and civic morality.

At the end of the 19th century, Oscar Wilde quipped, "America is the only country that went from barbarism to decadence without civilization in between." But being very much a product of contemporary Europe, the vibrant democratic public and civic morality at the bottom of much of American society at that time, would have been lost on him, just as today it is lost on us. If we are to have self-government, we have to renew and revive our public and civic morality. Know one thing, it is not comprised of listening to presidents, or watching 30 second ads, or voting every couple of years, it is the actions we take on daily basis and the motives behind them. You've been given a clear view of the greedy violent rabble who have floated to the top of this decaying republic, each day, they do more to secure their reign. They will only be stopped by a concerted effort of the American people, defining and reviving self-government for the 21st century.

debts, assets, and other confusions

They have learned nothing and forgotten nothing.
-- Talleyrand on the Bourbon Restoration

Martin Wolf has a piece in the FT that both gets to the heart of financial matters, while inadvertently showing the insolvency of our economic thinking. In the end, Mr. Wolf's piece is a defense of fiscal spending in reaction to deflation. In so doing, he makes the case, but confusedly, of the importance of understanding the difference between assets and debt. Wolf writes,

But the time has come to look at the longer-run implications. This is particularly important when one considers fiscal consolidation. On this I make a simple point: it is not just about debt; it must also be about assets.

Mr. Wolf's argument is confused because, at a financial level, debts and assets these days are in many instances the same thing, accounted for differently in separate books. Mr. Wolf attempts correctly, but not convincingly to offer a little clarification stating,

Yet governments should not sacrifice the future to the pressures of the present. What is the sense of cutting spending today if the result is a poorer country tomorrow? This point turns on its head the refrain that we should at all costs avoid burdening the future with additional debt. We should indeed avoid burdening the future with unproductive debt. Yet productive debt is not a burden, but a blessing.

The problem here, and it is a big one, is matters of finance and money are not integrated into modern economic philosophizing. That Mr. Wolf, who understands finance better than 99% of those writing on economic matters, is maybe confused, reveals how conventional thinking on such matters offers little help in extracting us from the problems the world finds itself mired.

The greatest argument for those advocating more fiscal stimulus is there is no inflation, but inflation is not the only symptom of a malfunctioning or dysfunctional financial/monetary/economic system. Insolvency is also an important measure. In a functioning market system, insolvency at the individual and business level are important mechanisms for balancing the system. However, insolvency at industry wide levels, such as banking or housing, or at a national level, are signals of much greater problems, problems not simply corrected by pouring in more money.

Mr. Wolf's piece once again ignores, as does almost all modern economic analysis, the problems of financial bubbles. They are first and foremost a problem of the financial/monetary system, and secondly, depending on their size and length, tremendously distort the underlying real physical economy. In all cases, bubbles are manifestations of unsustainable practices. They create unproductive debt. Thus, the dichotomy Mr. Wolf addresses between productive and unproductive debt is important and key to understanding our future, but more difficult to discern after large bubbles. Wolf continues, seeming to not really believe the distinction. He states,

Yet, in the short run, with demand below capacity, even borrowing that raises current consumption would be better than leaving resources idle. The fact that some residents (future taxpayers) may then have to pay a little more to other residents (bondholders) is surely a second order issue.

Much of this "demand below capacity" and "idle resources" are results of the preceding unsustainable bubbles, simply attempting to blow them back up is not only impossible, but detrimental. This is not a matter of "future taxpayers" paying more to other "resident(bondholders)", it is indenturing the future to a bankrupt past. With this statement, Mr Wolf could very well be accused of being plain disingenuous, particularly in relation to the reality of the Irish, where the Irish government, leaving aside any argument on fiscal policy, is indebting the future to pay-off the bad loans of English and German banks. But it gets worse, Mr. Wolf inadvertently revealing the true insolvency of much of our economic priesthood states,

Some insist loudly that one cannot solve a problem caused by too much debt by piling on more debt. But that is wrong. In the US and UK, net debt is close to zero: thus, debt is not a burden on society as a whole, but an obligation of some residents to others. As Nobel-laureate Paul Krugman points out, debt matters only because of who the debtors are. If, for example, debtors suffer an unexpected loss in net wealth or are forced suddenly to repay, the impact on the economy is bound to be fiercely contractionary. If the state can borrow, to offset this effect, it should do so. That would not impose an overall burden on a society, since net debt would remain close to zero. If it also raised GDP above what it would otherwise be, that would surely be a very good thing.

Phew, invoking Krugman and his Nobleness in defense shows without a doubt the lack of needed critical thinking, though it demonstrates the ahistorical thinking of our economic priesthood. First, from a current accounts balance perspective, arguing that US "net debt" is zero is incredulous -- it's accounting gimmickry -- of course something at which we do excel. Secondly, the question of solvency from a national perspective, concerning what the debt is comprised, is an important for the US, and really who cares about the British? History is littered with nations, Mr. Wolf's old Britannia for one, who continued to add to their debts, a better word being liabilities, in an attempt to sustain the unsustainable, leading eventually to national insolvency. Yet, Mr. Wolf wants to disregard these problems in lieu of the great magic elixir of our industrial capital priesthood, growth, "a raised GDP".

Mr. Wolf is right, the difference between debt and assets is key, but in a system where the accounting of debts and assets is completely confused, in fact where all debt is simply notched as someone else's asset, it is problematic. Where a financial system i completely removed from the real economy, combined with a political system that is eminently corrupt, the further wanton dumping of money into the system will only create greater distortions and future hardship. For example, all dumping of money into the US economy furthering our oil addiction, whether it's infrastructure supporting the internal combustion engine or military misadventures across the Mid-East, is not just bad debt, but destructive liabilities, though this might not seem the case to collar counties of Maryland and Virginia.

The problem is the American political economy is so distorted and so corrupt to not be able to tell the difference between good and bad debt, in fact, it favors bad debt. That is why talking about simply dumping more money into the system, without a corresponding discussion of reforming our financial, corporate, political and government systems is not simply detrimental, but destructive. We can begin a healthy discussion on the future in deciding what debt is going to be destroyed and how the losses are going to be accounted. Afterwords, we can have a better understanding what future good debt looks like. Without doing this, all the talk of throwing more money at our problems is nothing more than an a desperate attempt by a decadent and corrupt aristocracy and its servants to keep in place a failed status quo.

irish and cantona

'Red' Will' Danaher, "So, the IRA's in this too, huh?"

Hugh Forbes, "If it were 'Red Will' Danaher, not a scorched stone of your fine house be standing."

Michaleen Flynn, "A beautiful sentiment."
-- John Ford's, The Quiet Man

There's no denying this world is full of prejudice. And if you spent some time in non-industrial areas of this planet, you'd find one of the greatest prejudices is against rural farming folks from city slickers. South America, Africa, Indonesia, you hear the urbanites level similar charges, "lazy and stupid." Amongst renown political thinkers, in Europe and America, where rural life has mostly disappeared, you'd be hard pressed to find a good word for farmers over the past couple centuries, most took Marx's view of the "idiocy of rural life." Probably, the greatest exception was Jefferson, and there is many reasons for this, but one of the biggest was Jefferson's view that a small farm provided the population the economic power and independence they needed to be democratic citizens. But Jefferson's yeoman farmer republic passed from scene well over a century ago, and in the industrial age, America never found too great an answer to replace the elegance of Jefferson's small farm economic democracy. Maybe unions, but workers quickly replaced farmers in prejudice, and in the last four decades as Wall Street and the bankers sold-off American industry, it was met with little opposition, particularly from the servants class which replaced it.

The Irish were well behind much of the continent and the US in industrialization, in fact, it's been the last several decades that the nation really began to industrialize. So, we can look at Sinn Fein's little late response to banking events as maybe a remnant of a still slower rural life, but they certainly make up for it with a little Irish flair and it looks like the government will fall.

But this begs the question, what's the excuse for no American response to our banking crimes? How long the list brothers and sisters if we were to charge "economic treason," filled with the most illustrious Democrats and Republicans of the past several decades. How do we begin the long road to justice? How do we begin the discussion on reforming democracy, and what in the 21st century is the Jeffersonian equivalent of the yeoman farm, providing economic independence necessary for democratic citizenry?

The Guardian has a piece(tx yves) on football legend Eric Cantona calling for an organized banking panic. The whole concept has a beauty in its turning on its head the historical view of panics. It also can start people questioning what really is banking and how is it reformed so that its decision making is much more widely spread across society? How do we make banking more democratic? One can judge from the response of the spokeswomen for the French Banking Federation that it makes officialdom nervous:

"My first reaction is to laugh. It is totally idiotic," she told the Observer. "One of the main roles of a bank is to keep money safe. This appeal will give great pleasure to thieves, I would have thought."

But what of the thievery that is modern banking mademoiselle? Isn't it all our responsibility to not be victims? And understand brothers and sisters, the first reaction to any establishment against a threat is to make it ridiculous, "to laugh." Mr. Cantona is on to something.

Check out Move your Money for an American effort.

odds and sods

Twenty years or so ago, I was introduced to the Internet in an article in Rolling Stone interviewing Mitch Kapor, who had taken about evangelizing for it. I was instantly smitten as soon I plugged-in and have remained so. I've been increasingly concerned in recent years as the distributed networking power of the Net has been pushed aside with the development of new information monopolists, Tim Wu has an excellent must read piece in the WSJ on the trend. I mostly attribute this to our inability to break from our industrial capital economic models, but still have great faith that will be done. I've been more concerned in the last six years of the incessant naval gazing of much of the thinking of those building the Net, they need to begin looking beyond the Net and at the greater world.

Nonetheless, I spend far too much time drifting the Net. Youtube is the greatest time sink, especially for those with a pop-music bent. For the five on this list concerned about such things, I found an amazing piece of pop-trivia from the late 70s, the Jam doing Eton Rifles and Joy Division doing Transmission on the same TV show -- good era for pop-music. But it brings up the question on the entire value of pop. We know one thing, it's way overvalued in this society. People are well over-compensated in all aspects and given far much too respect for something that at best rises to a measure of triviality. A couple years ago, a good friend and I were discussing the value of pop, and I asked, "In a hundred years what do you think of the last fifty years of pop culture will be remembered?" He replied without hesitation, "Nothing." I think that's about right, yet the little purple man is still absolutely right, "but life, it ain't nothing, unless it's got that pop."

However, our addiction to pop is by no means harmless. It for example has been very detrimental to our politics, creating an era of political dwarfs. If you ask who in the last fifty years of American politics will still be influential in a century, there's only one answer, Martin Luther King, and he will only be remembered in the larger context of the lessons of the mass democratic movement for civil rights, that is, if they become institutionalized, which at present seems a more remote possibility than ever. More representative of our era is Mr. Bernanke, who today makes one of the most reactionary speeches of American politics in recent years, and that's saying something. He blames the Chinese, calls for more debt enslavement, and completely ignores Wall Street's and corporate globalization's roles in creating the problems face, while placing the Fed into a public political position that it has avoided for a hundred years. Is it any wonder Mr. Krugman has become the Fed's strongest backer?

Yet, oddly enough hope arises from the strangest places, in this case Man U football legend Eric Cantona. Mr. Cantona has come out publicly promoting "Bank Mutiny Day" in Europe.(tx zerohedge). Mr Cantona comes up with the most eloquent description of democratic politics and democratic action I've heard in many years in reference to gaining back control of our lives from the banks:

"We don't pick up weapons to kill people, to start the revolution... the revolution is really easy to do nowadays. What is the system? The system revolves around the banks. It's based on the power of the banks... so it must be destroyed starting with the banks. This means that the 3 million people with their placards on the street... they go to the bank, withdraw their money from the banks and these ones collapse. 10 million people and the banks collapse and there is not real threat, a real revolution. We must go to the bank. In this case there would be a real revolution. It's not complicated. You simply go to the bank in your country and withdraw your money. If there are enough people withdrawing their money, the system collapses. No weapon, no blood, or anything like that.

As one of the fad-four said, "Power to the people, right on."

the irish and the banks

Was it for this the wild geese spread
The grey wing upon every tide;
For this that all that blood was shed,
For this Edward Fitzgerald died,
And Robert Emmet and Wolfe Tone,
All that delirium of the brave?
Romantic Ireland's dead and gone,
It's with O'Leary in the grave.
-- WB Yeats

If you took the the couple weeks in the build-up of the Irish crisis and transposed them onto a time-line this spring of the Greek "crisis", you'd get almost day by day similarity. Credit spreads widen, denial, talk of bailout, more denial, more bailout talk, admission of problem, then the bailout. But there's some important differences between the Irish troubles and the Greeks. The Irish government has no immediate need for money. And while the Greek problem was as much about bailing-out French and German banks as the Greek government, the Irish problem is very much about the Irish banks, though it's also very much about Portugal, Spain, and really the whole Eurozone. Funny enough, it's the FT that has the best piece on the whole affair stating:

Ireland’s basic problem is that it now has to choose between its own sovereign solvency and the solvency of its banks. Other European countries – in and out of the eurozone – may soon face the same choice. In such a world, keeping banks afloat with public capital risks sinking the sovereign – and with it, the whole banking system.

Dublin has cash to get by for another half a year. There is something absurd about pressuring Ireland to borrow money from Europe in order to calm markets enough to lower yields for Spain and Portugal, whose refinancing needs are more acute. If this were the only consideration, the sovereigns most immediately at risk should be told to tap the European financial stability facility.

But the most urgent problem is not the solvency of the Irish state; it is the solvency of the Irish banking system (though Dublin has spared no effort to assimilate the latter to the former). If Irish banks collapse – and if one falls it will not fall alone – it may well trigger bank failures across a continent that remains full of institutions whose earlier stress tests were remarkably stressless. Right now, this kind of contagion should scare Europe’s leaders even more than the spectre of sovereign defaults.

So, let's understand, nothing's been fixed in the banking system over the past couple years, and that goes double for the big banks in the United States. Yet, the idiocy of throwing more and more money at the banks, further indenturing the future is the only thing the effete and corrupt political classes of Europe and the US can think to do. The FT puts it very succinctly,

Saving the banking system, however, is not the same as bailing out extant institutions; nor should taxpayers give up even more of their blood to the walking dead. Yet this is what Ireland is being asked to do – borrow money from the EFSF to raise the banks’ equity. Doing so would be an insult to the Irish people (whose incomes will be mortgaged to pay the loan back) and a gratuitous one at that: it defies logic to claim that adding to Dublin’s debt will seduce markets back to Irish sovereign bonds.

Forcing the FT to the conclusion that was inevitable two years ago,

So Ireland – and Europe – must confront the prospect of an inevitable string of bank restructurings. Giving away more capital now will weaken states’ ability to deal with the problem when there is no more time to be bought.

Preparations must now be made for dealing with a run on banks by depositors or wholesale lenders. Countries that have yet to put in place special insolvency regimes – Ireland included – must do so without delay. They must allow states swiftly to take control of banks so as to keep operations going during a panic and quickly allocate losses by forcibly restructuring wholesale debt or converting it into equity. Paradoxically, Ireland’s reliance on wholesale funding may make it easier to force losses on creditors.

I'd say let the restructuring begin, but we're not quite there yet, after all Mr. Bernanke's just warming-up the money transistors. So, let's start thinking about destroying the bad debt and breaking up the big banks. When that's done, we can actually start thinking about an effective monetary and fiscal policy, but to do that we'll need to think a little harder about what a 21st century economy looks like. It doesn't much resemble the last three decades of the 20th.

It would be nice to see the Irish force the issue here and if they need any encouragement, they should contemplate those nice English offer to help with a few more billion pounds of debt. I hear they're a little nostalgic for Eire.

California Republic

Chris Whalen is on tech/ticker saying California is going to default. The interview is well worth watching. Whalen says California will either default or "start issuing its own currency again." It might be better not as either/or, but, and/both proposition, that is, default and begin issuing some sort of California currency -- the state and municipalities get in some aspect of the money creation business. The real and important point Whalen hits on is how are we going to begin restructuring all the world's bad debt, meaning bondholders are going to have to take haircuts, and just as importantly, we're going to have to fundamentally reassess how much of our economy works, this is imperative, and must go along with any notion of restructuring.

I didn't hear the words "default" or "California currency" come out of the former/future governor's mouth over the course of the campaign. But it's something he should give great thought, once again California could provide leadership for the world, this time getting the bankers to begin toeing the line. After all, default and local currencies, call it sound money, those are radically conservative notions, something a good Jesuit could appreciate.

politial economy

Take a look where you're livin'
You got the Army on the street
And the RUC dog of repression
Is barking at your feet
Is this the kind of place you wanna live?
What we need is
An Alternative Ulster, grab it, change it's yours
Get an Alternative Ulster, be an anti-security force
Alter your native land
-- SLF

Well another day, another European nation going under, this time the Irish. It's all a bit too predictable at this point. CDS spreads widen and the Germans make noises there will be no more bailouts. Certainly not a bet I'd take, they didn't set up that bailout mechanism last spring not to use it. So, after centuries of putting up with the barbaric English, the Irish will now be in servitude to the bankers, in ten years we can ask them which is worse. Meanwhile, over in Asia at the G20 meeting, our global elite show they are completely incapable of changing direction. If ever I've seen a politician dead in the water it's Mr. Obama, take the under on 2012. The only greater show will be to watch the Zombies that are the Republican party and see how much flesh they can devour before the American people take their heads off.

The problem is we, and I mean all of us, are still in denial, we need to change. The consumptive insanity that is America has to change and the great dream of corporate globalization, that the world can live like consumer America has to be dropped. But we're not doing that, we're, and again I mean all of us, instead are doing everything we can to hold on to no longer sustainable past. The Fed pumps dollars into the global financial system to keep the illusion alive, that all that bad debt can be paid off, further indenturing the future. Meanwhile on the other side of, call it the Bernanke-Krugman reality spectrum, we have the shout for more fiscal stimulus, which without a complete change in direction from the last thirty years will be about as effective as Mr. Bernanke's quantitative easing.

What we are witnessing in Europe and the US is an increasing divergence of wealth and the vast majority. Instead of a recognition that the political economy of the past thirty years, and one should argue the political economy of the past hundred, can no longer provide for the majority, we get in national economies a continued squeezing of the bottom and middle, while the top floats above in a global bubble induced by the world's central banks. The one thing we've learned about financial bubbles is they don't cause inflation, they pop, leaving a lot of worthless debt. This one will too, but how long? Place your bets, though one thing about this life is the irrational can last a lot longer than anyone would conceive reasonable.

When we get to the point where we understand we don't have to uphold our insolvent power structures, that there are indeed alternative healthier realities, the future can once again be filled with opportunity.

on trade

"You going to liberate us girls from male, white, corporate oppression?"
Tell em like it is, Fear of a Female Planet
Fear baby
Let everybody know
-- Sonic Youth

When speaking of economics, one very old and fundamental element is trade. From prehistoric times, societies/cultures traded. Egyptians, Babylonians, Chinese, Greeks, Phoenicians, Romans, Aztecs, and Incas, all had great trading networks. Trade is in no way a development of industrial capitalism or more recently of corporate globalization, it is far older. However, many of the myths, theories, and practices valuing modern trade developed over the past two-hundred years. Particularly a wrong-headed doctrine that all trade is good, which can traced back to the particular place and time when private international merchants were attempting to break-up the monopolies of state mercantilism. Over the past fifty years, the world, and particularly the United States went completely to the other extreme, abdicating all state power on trade to Wall Street and global mega-corporations to the detriment of both the United States and the rest of the world.

Greider has a good piece in The Nation laying out some of the fundamental issues involved, particularly:

Washington must also change the rules for how American business and finance operate. Only in America do multinationals get to behave like free riders, with no strings attached. They harvest public money as subsidies and investment capital, they are protected by US armed forces and diplomacy, and they are rescued when they get into trouble. It is a one-way relationship, and the American public knows it.

US corporations and banks remain free to move jobs and production whenever and wherever corporate strategy dictates, regardless of the consequences for the economy. Government can stop this by forcing them to serve the broader national interest. This is not as radical as it may sound. Every other leading industrial nation does it, one way or another. They impose limits on corporate strategy, either in formally binding ways or through political and cultural pressure, to ensure that good jobs and the best value-added production remains at home.

The whole piece is well worth reading, but I have serious doubts the Democratic arm of the DC political class will turn against Wall Street and the entrenched corporate globalization doctrine. In fact I'd bet against it, industrial labor is dead in America, and the issue for the remnant service and government employee unions isn't high. For many reasons, I see a neo-America First movement coming much more naturally out of an increasingly radicalized "nativist" Republican base, but that remains to be seen.

In either case, we need a much different view of trade in the 21st century. One taking a much closer look not just at the national implications, but the impacts on locality. An understanding that industrial technologies have rolled over local diversity and advantages, creating an unsustainable and increasingly volatile global homogeneity. Underlying the entire, present corporate globalization system is one thing, cheap oil, and the world has no more cheap oil(tx yves). The US can lead the world developing new, healthy and sustaining global trade by announcing we're going to heavily tax our oil imports. As Greider concludes,

All these suggestions are deeply disruptive to global commerce, and, yes, many would raise prices for Americans. But the country's predicament is a historic emergency that cannot wait for market solutions. The United States must, in effect, decide that its role as Goliath is over. It's time to act like a nation again rather than as the global overseer.

housing

My new house
You should see my house
My new house
You should see my new house
According to the postman
It's like the bleeding Bank of England
My new house
Could easily crack a mortal in it
-- The Fall

So, the National Realtors Association released a housing report(tx calculated risk) today stating:

The Pending Home Sales Index,* a forward-looking indicator, slipped 1.8 percent to 80.9 based on contracts signed in September from an upwardly revised 82.4 in August. However, the index remains 24.9 percent below a surge to 107.8 in September 2009 when first-time buyers were jumping into the market to take advantage of the initial deadline for the tax credit last November.

Whatever other number you want to look at about the economy, housing remains key. Housing was the center of the bubble and it continues to deflate, and from every historical precedent, it's going to continue to deflate, no matter how many times Mr. Bernanke presses ctrl-alt-shift-$. Currently 25% of people are underwater in their mortgages, and estimates of 40% within two years. Which means all the losses the banks are hiding are going to only grow larger. Now remember, the whole housing bubble was created to, literally, paper over the great imbalances in the American economy that had developed over several decades, most significantly, the stagnation of wages. Which is also why all the cries of dumping ever greater amounts fiscal stimulus into the economy without a serious look at correcting these imbalances is just as much crack-pipe policy as they're smoking at the Fed.

We should stop the foreclosures, write down the mortgages so people can stay in their houses, and make the banks and bondholders take the losses, breaking up and recapitalizing where necessary. That ain't going to happen, which is why if you think 2010 was bad for incumbent elected officials, you ain't seen nothing yet.

election

To dance beneath the diamond sky with one hand waving free
Silhouetted by the sea, circled by the circus sands
With all memory and fate driven deep beneath the waves
Let me forget about today until tomorrow
-- R. Zimmerman

Never underestimate the power of the American people. I mean goddamn, to Lazarus-like raise from the grave the rotted decrepit corpse of the Republican party and make it appear full of life and vigor, if even for one night, is quite the trick. What does that say about our pathetic Democratic party? Well, it's a confirmation that the Democrats regained power on the cheap in 2006 and 2008. There was no great rethinking or years organizing from the ground-up. No, just a fat and happy Democratic DC political class waiting for the public to become completely exhausted by 30 years of Republican rule, so the Democrats could get back and divvy up the spoils of an increasingly corrupt and dysfunctional political economy. But remember, even that was difficult. The DC Democrats had to be dragged kicking and screaming by Howard Dean and the Internet crowd to oppose the wars, which was the determining factor in the 06 election and a major determinate in 08. Once in, that was quickly forgotten.

No doubt the Republicans will make the same mistake in misinterpreting these most recent results. This was the ultimate "none of the above" election, with the Republicans playing the part of none. What will come next? Our completely broken and corrupt politics will now turn to focus on who will next wear the purple, but come on folks, think about it. Nixon, Carter, Reagan, Bush I, the Clintons, Bush II, and Obama, the real question should be why would we want to elect another president?

We have no functioning politics in this country. I'm afraid we can continue down this path of swapping out one failed lot for the other for a long time, with one continuity, the bipartisan looting of America by our political class, Wall Street, and the mega-corporations. Our politics needs fundamental reform. Our economy needs fundamental reform. This is only going to be accomplished by us all coming together and figuring out what political economy is in the 21st century and then implementing the change. The first step is understanding we have a problem, things can't continue the way they are, nor are they going back to how they were. That is where we are.