Does Europe Exist?

Europeans need to decide whether or not Europe exists. If it does, the rich need to act accordingly.

If Europe exists or wants to exist in the future, if there is a community of like-minded people who care about each other and want to stick together, then the fortunate need to help the unfortunate. This remark by former European Central Bank Executive Board Member Lorenzo Bini Smaghi is typical of Europe’s problem:

Ireland has made huge progress over the last year. It is really a pity what is happening in Greece is spoiling all this. Without the Greek events, I think Ireland would be able to come back to the markets. [Bloomberg 5/18/12.]

Well, of course, without those who are in trouble, those who are not would be better off. What is the point of such churlishness? The point, clearly, is that “we” are out for ourselves and could care less about our neighbors. And there are currently more than a few rich Germans who think exactly the same thing about Ireland.

Domino theories usually don’t hold much water, but the idea that eliminating Greece will only pull the plug on Spain…and Ireland is hard to dismiss. It is beginning to appear that the only Europe that exists is the old one that brought us a century of fascism and war. Is there a European community or are there just rich and everyone else?

It seems unimaginable for Europeans to turn their backs on the society that gave democracy to the West, but if the Acropolis no longer means anything, if the various little nationalities over there don’t want to be Europeans working together in the face of adversity, here’s an option: all the Mediterranean societies can walk away from the EEC, leaving it to the cold-hearted Germans who apparently are now quite happy to discover that they won WWII after all. It is not clear what that would accomplish in economic terms since Spain, Portugal, Italy, and Greece all face the same economic challenge, but at least they might have empathy for each other. And I perceive certain gentlemen standing in the shadows with welcoming smiles on their faces. Erdogan, Gul, and Davutoglu today constitute the most innovative decision-making team in the neighborhood. Could they lead a Mediterranean common market to a better tomorrow?


Current Economic Indicators

Keep the following evidence in mind when calculating your financial future…
  1. The Baltic Dry Index, a proxy indicator of world trade levels, crashed in 2008 and has remained low ever since but has gone even lower in recent weeks, evidence supporting the hypothesis that not only does the world remain in recession but that it is now suddenly worsening. See Bloomberg’s chart.
  2. Now that 49 states have cut a deal, punitive for sure but more in the nature of a stinging slap on the wrist than a real message to the corrupt super-rich, we may anticipate a flood of foreclosures in 2012, perhaps an additional one million houses over 2011. Anyone think this might further depress housing values and lead to more unemployment? Some of these foreclosures will surely be of fake homes that corrupt investors were trying to flip, but overall, consider this evidence supporting the recession double-dip hypothesis.
  3. The percentage of the U.S. population working continues a steady decline that began even before the Financial Crisis of 2008: population is growing much faster than jobs are being created. If the rising number of working-age adults out of work had decided to go on vacation or if wages were rising fast enough so that Moms could afford to stay home, that would be fine, but these sound like rosy scenarios. This evidence supports the hypothesis that we are not recovering from the recession.

Shooting Ourselves in the Foot

Human nature creates crises: the safer, smoother, more stable things are, the more risk people will take, sooner or later wrecking all that stability. Despite the outpouring of analyses of the 2008 Financial Crisis, it remains unlikely that society has internalized this lesson about the ever-present threat of human nature even as regards economic crises, however obvious the message may be. How much less likely is it that we are anywhere close to protecting ourselves from self-inflicted political crises?
We all are now aware that the shortsighted, selfish behavior of a few millionaires on Wall Street, a few politicians, some compliant regulators, and–truth be told–more than a few of the “other 99%” looking to cheat their neighbors for a quick buck can combine to generate a financial tsunami. It’s not about foreigners. We are our own worst enemy. What most complacent and confused Americans fail to understand is the degree to which we make our own international political crises as well. From the American War in Vietnam to the Global War on Terror to the looming war against Iran (backed by Russia, China, and maybe Pakistan), the U.S. has the power to take the initiative and create these disasters but lacks the power to resolve them in a beneficial manner.
Note clearly that this discussion concerns self-inflicted crises, those resulting from the conscious choice to engage in unnecessarily greedy behavior. A crisis caused by an external force, human or natural, lies outside the discussion. Here the concern is on a class of crisis caused by perfectly avoidable human greed leading to obviously risky behavior (in effect, investing in a chain letter). To put it differently, the class of crises of interest here is a class for which one should expect the guilty to be named and punished (both by the judicial system for crime and by God for their sins).
Since everyone is now thinking about utterly unnecessary and egregiously man-made financial crises even as we are hit by repeated utterly unnecessary and egregiously man-made political crises, a question that seems timely and useful flows from the above paragraphs:
Can our recently learned lessons about financial crises help us to avoid political crises?
In The Black Swan, Taleb reports an alleged pattern of economic risk-taking:
The economist Hyman Minsky sees the cycles of risk taking in the economy as following a pattern: stability and absence of crises encourage risk taking, complacency, and lowered awareness of the possibility of problems.[78.]
Nouriel Roubini, the economics professor who predicted the 2008 Financial Crisis in brilliant detail, described the vicious cycle of economic crises as consisting of [once I delete the economic adjectives] the following steps [Nouriel Roubini and Stephen Mihm, Crisis Economics 18.]:
  1. Worries drop;
  2. Costs fall;
  3. The bubble drives growth;
  4. Increasingly risky ventures are undertaken.
Applying this abstract vicious cycle (to which I would simple add the obvious final stepcollapse, i.e., the point at which the cycle ends…with a bang) derived from economics to international relations is suggestive. Whether in economics or politics, the dynamics of the bubble of greed are frequently equivalent. In the aftermath of 2008, the point as regards economics must be obvious to all, whether they have read Marx, Keynes, Minsky, and Roubini or not. Every poor, naïve, uneducated (or just greedy) homeowner who took out a mortgage that he or she obviously could not afford and has now lost that home is today an expert in bubble economics and the danger to us all posed by unregulated capitalism.
But international politics is harder to see clearly through the fog of greedy politicians who classify information to prevent the voters from learning the truth and who wave the bloody shirt of foreign menace to promote their careers. Language too helps to obfuscate. We do not talk of imperialist bubbles. But if one abstracts to clear away the clutter of detail, the dynamics of greed, willful denial, moral hazard, and willingness to riskeven promote—“collateral damage in so-called Global War on Terror looks like nothing so much as the 2008 Financial Crisis. Leaders became increasingly confident that they could not be stopped, with their appetites for new victories, new wealth, and new power rising apace. As the new policybe it the issuance of new securities based on sub-prime mortgages or military adventures in yet another Muslim societyproceeded without major defeat, each new venture seemed less and less costly. Every small gain was used to justify a larger gain, every small risk to justify a larger risk. Even when the risks were seen, they were dismissed; after all, it was the poor who would suffer from unemployment and foreclosureor death on the battlefields of Iraq and Afghanistan, and in the case of the wars, most of those poor were foreigners. Moreover, like the Wall Street firms bailed out by politicians generous with taxpayer funds, the White House was too big to fail.” Like Wall Street megabanks, the White House knew it and took advantage of it: moral hazard gone wild. Like big bank CEOs, presidents and vice presidents are almost never held criminally accountable in court for their sins. And then suddenly, the financial/imperial party was over, and the victims were left to clean up the mess.

In the abstract the pattern of failure is clear: failure of the people to carry out their democratic responsibility to monitor their leaders, arrogance, abuse of power, denial about the risks, corruption, lack of concern about collateral damage, and moral hazard.

As long as society trusts those in power, the powerful will abuse that trust for personal advantage, be it the selling of bad securities or the selling of bad wars. The more society is willing to countenance collateral damage to workers driven into unemployment and homeowners foreclosed, or Muslim wedding parties bombed and Muslim societies denied the right to civil liberties and national independence from the globalization avalanche, the more the rich and powerful will hold parties at the expense of everyone else. Bubbles are very good business for those who create them. Theywill never stop doing so until weput in place the moral strictures, legal regulations, and judicial holding to account necessary to stop them. But it is not that simple, for many of us were tempted to buy houses we judged we could flip into the hands of a more naïve neighbor to skim an unfair profit; many of us looked the other way while innocent Muslims across the globe were slaughtered in the name of global war to retain all the undeserved special privileges that make possible a rich life in a poor world. So in the end, the old saying is true: we get the government we deserve.

Government Collusion With Big Finance

Does the appearance of government collusion with Wall St. crime come from government incompetence or…from government collusion with Wall St. crime? Intentional or not, when the government lets financial criminals off the hook, the result is to undermine U.S. national economic security.

For the latest evidence of government collusion with Big Finance, read the piece in Bloomberg Businessweek [11/4/11] accounting an alleged SEC habit of slapping Citibank on the wrist for repeated fraud while allowing Citibank to grin all the way to the…well, you get the idea. Here’s the deal, judging from the article:

  1. Government, desiring popular respect, sternly exposes Wall St. fraud;
  2. Wall St. criminal enterprise sincerely apologizes;
  3. Government demands that Wall St. criminal enterprise promise never to do it again;
  4. Wall St. criminal enterprise agrees, departs, and does it again.
  5. Return to Step 1. 

But the SEC settlement has to be reviewed by a judge, in this case Judge Jed S. Rakoff of the Federal District Court in Manhattan, and he is showing signs of independent thinking.This raises some serious questions:

  • Is he sincere?
  • Can he resist the pressure that will surely come his way to “play ball?”
  • What does the SEC really intend to do about Wall St. fraud?
  • Is there actually hope that someone in government will support the 99% and Occupy protesters to bring big financial criminals to justice?

As the reports of violence appearing during Occupy protests become increasingly frequent, it is important to keep our eyes clearly focused on the main issue: the degree to which the financial criminals and exploiters sneaky enough to defraud in ways that are not technically illegal under our highly biased system of “justice for the rich” are held to account for their attack on national economic security.


Historical and Moral Background:
There is of course nothing new about corruption, self-serving behavior, or even collusion between rich financiers and rich politicians at the expense of the citizenry. A huge distinction needs nevertheless to be made between elite corruption in a context of a “rising tide lifting all boats” and elite corruption slaughtering the goose that lays the golden egg. Even a society founded on a bias in favor of the rich must make that distinction in theory and, through the workings of the system of justice, in practical law. Whatever the pro-elite, pro-business bias of American capitalism, the government does occasionally strike back against the extremes of Big Finance’s “abuse of privilege.” The dismissal of an early 1950s government suit against Wall St. by U.S. Circuit Court judge Harold R. Medina on September 22, 1953 was, despite its immediate defeat of government efforts to rein in Wall St. corruption, a long-term landmark in making the behavior of Big Finance more transparent and in establishing in law a clear distinction between the narrow legalities of the situation and the broader concept of morally appropriate behavior in a democracy.
In his history of Goldman Sachs, Money and Power [Doubleday, NY, 2011: 95], William D. Cohan summarizes the significance of Medina’s penetrating ruling:
It demonstrated in vivid detail how investment banks garner business. Medina ruled that the investment banking firms did not violate the law. But his lengthy analysis raised the question of whether Wall Street’s practices at that time furthered its ostensible mission–to help companies raise capital for growth–or whether much of the banks’ activity was designed to increase the bank accounts of their senior partners. An activity may be legal, but is it just?

As the American system of government evolves and–citizens must hope–matures (not at all an inevitable evolutionary trajectory), it maneuvers through an environment rich in alternative strands of governance DNA. “It” picks from among these strands with two frequently contradictory motivations in mind–short-term benefits being sought by individual actors or groups for self-aggrandizement and long-term benefits being sought by actors or groups that choose to act for the benefit of the whole society. These strands of “governance DNA” include bits and pieces of fascism [e.g., brute force joint dictatorship of industry and government over the people with massive welfare for corporations], raw capitalism [e.g., child labor], and socialism [e.g., welfare for average individuals], not to mention less fertile alternatives such as communism, religious fundamentalism, and feudalism. Evolutionary trends may push the system in any direction; if democracy is to mature, however, the system must surely evolve generally in the direction of, albeit not necessarily all the way toward, socialism, i.e., governing for society. A landmark step toward such maturation of governance would be the transformation of Judge Medina’s concept of just behavior on the part of a rich financial elite into law that would prohibit behavior by Big Finance that failed to contribute to the general welfare.

      Do Not Mention the Israeli Threat

      After the mess created globally and domestically by the U.S. campaign against Islamic independence, Washington may find the idea of a nice, clean little surgical strike too good to resist.

      Americans are protesting in the streets with sufficient vigor to irritate the elite. The brutal response of police combined with the hostility of various mayors makes that pretty clear. And since the elite has, in the three years of recession and unemployment done little to rein in banks or clean up the economic mess, unless something changes, the protests seem likely to get worse.

      Internationally, the U.S. is back on its heels in Iraq, which is showing a degree of independence that must be embarrassing to the imperial crowd (though it could of course be considered an achievement by a democracy that wanted to lead by example rather than brute force). Meanwhile, Israel’s diplomatic position in the world is ever so slowly crumbling, the U.S. has seen Somalia slip totally out of its grasp, the Arab Spring made the U.S. look irrelevant (even worse than being hostile), Iran’s influence is spreading, Lebanon is lost, Turkey is disenchanted, and Afghanistan is a slow-motion disaster. China sits grinning in the distance like the Cheshire Cat.

      Is it possible that the President facing, simultaneous domestic and international messes that are steadily getting worse, might be tempted to surrender to the vociferous Israeli lobby and sacrifice U.S. national security to A) satisfy the demands of elite extremists ruling Israel for war against Iran to distract Israeli voters from the Palestinian issue and B) to distract U.S. voters from the combined domestic and international messes?

      Is it possible that American voters will be tricked once again by the images of pinpoint bombing–this time no doubt accompanied by not-so-pinpoint mushroom clouds–into an emotional outburst of zenophobia and unearned trust in their leaders?

      Iran &Israel’s Armageddon Option? [IsraCast 10/30/11.]

      IAF chief must save Israel from futile attack on Iran [Haaretz 11/2/11.]

      Netanyahu trying to persuade cabinet to support attack on Iran [Haaretz 11/2/11.]

      Well, just consider this: in Israel, the idea of nuclear aggression against non-nuclear Iran is being loudly debated by the thinking public. In the U.S.–the country that must give permission, do most of the fighting, and pay the bill for any such insanity that may be implemented–of course no one is saying anything. Mentioning such things in public would, after all, be rude. Israel and the U.S. “share values;” the two are a “team.” So to question publicly an Israeli plan, even if promoted to meet some special agenda like getting reelected or distracting the world from Israel’s war against the Palestinian people, even if the plan may end up crippling U.S. national security, well…if we publicly discussed such a plan, we just would not be “team players.”

      The Utility of Terror

      Terror is a wonderful tool, opening wide the door of opportunity.

      Foreign adventures and profit go hand-in-hand, but the obvious link–war profiteering–may well be far less significant than the effectiveness of international tension as a curtain to obscure from a naive public the domestic activities of the rich. And terror provides the very best route to blinding the public. As the public reacted to 9/11 with panic and rage, the super-rich surely profited from the war directly by selling war materials to the U.S. Government, but the real source of wealth for the super-rich came not from the War on Terror that the Government claimed to be fighting to “protect” Americans but from a secret war by Big Finance against the American people. In the post-9/11 panic climate, who was in the mood to complain about mortgage fraud or esoteric Wall St. securities bets against Wall St. clients? It would be very difficult to make the case that the simultaneous occurrence of the decade-long war scare and the astounding simultaneous mega-theft by Big Finance that enabled the astronomical self-enrichment of the richest of the rich was a mere coincidence.

      As illustrated by the blue lines on top of the Highest Quintile bar above, the real action occurred in the top 1%:

      The rapid growth in average real household market income for the 1 percent of the population with the highest income was a major factor contributing to the growing inequality in the distribution of household income between 1979 and 2007. Average real household market income for the highest income group nearly tripled over that period, whereas market income increased by about 19 percent for a household at the midpoint of the income distribution. As a result of that uneven growth, the share of total market income received by the top 1 percent of the population more than doubled between 1979 and 2007, growing from about 10 percent to more than 20 percent.

      Since 2007, conditions for the average American have only worsened. According to a recent Census Department report:

      The official poverty rate in 2010 was 15.1 percent—up from 14.3 percent in 2009. This was the third consecutive annual increase in the poverty rate. Since 2007, the poverty rate has increased by 2.6 percentage points, from 12.5 percent to 15.1 percent [DeNavas-Walt, Carmen, Bernadette D. Proctor, and Jessica C. Smith, U.S. Census  Bureau, Current Population Reports, P60-239, Income, Poverty, and Health Insurance Coverage in the United States: 2010, U.S. Government Printing Office, Washington, DC,

      In addition, according to the Census Bureau, poverty has continued to rise [14] and the number of employed has continued to decline [12] even since the official end of the recession.

      Whether war or just the threat of war, insecurity “justifies” handing taxes over to war industries at the expense of government services to the population and makes those who complain appear “unpatriotic.” Until the 2008 Financial Crisis exposed the nakedness of the emperor with Wall St. billionaires begging for taxpayer-funded Big Government welfare, few realized that it was in fact the Kings of Finance who were the unpatriotic ones.

      That bin Laden trapped muscle-bound America into a war of aggression against Islam that he had no hope of provoking on his own is now obvious. Devious and subtle as he was, perhaps we will never know if bin Laden was so far-sighted as to have invested in major Wall St. firms back in 2001. But it does not take much imagination to figure out that a government launching a global war amid popular panic is unlikely to crack down on domestic corruption by its closest supporters.

      The true cost of war goes far beyond the directly expended blood and treasure. Wars undermine domestic investment and civil liberties. More, wars create a climate that impedes social reform. Wars encourage blind faith in whatever leader happens to be in the chair and focus attention on intensification of the war effort at all costs. Simply put, wars and democracy are mutual exclusive, and the war years have proven to be a great gift to the super-rich.

      For the graphs to explain what is happening, see Mother Jones.

      Clear Financial Thinking from Washington

      It is not fair to criticize Washington endlessly. Here is one example of clear thinking.

      If you look carefully, you can find patriotic and intelligent members of the U.S. government who are not afraid to spell out clear priorities that address national problems. Consider Representative Marcy Kaptor of Ohio, who makes this cogent statement on her website about the state of reform of the corrupt U.S. financial system:

      The Dodd-Frank Wall Street reform bill did not go far enough in addressing the challenges facing our financial system. For example:

      • It did not replace and strengthen Glass-Steagall, separating commercial banking from investing or speculation.
      • It did not reform the credit rating agencies, which had a starring role in the misdirection of investors, including the fundamental business model of the credit rating agencies.
      • It did not force every derivative to be traded openly and transparently on an exchange.
      • It did not end too big too fail.
      • It did not prevent Wall Street banks from replacing community banks.
      • It did not encourage prudent lending.
      • It did not strengthen support for those agencies finding and fighting fraud in our financial system.
      • It did not properly address the housing crisis. 

      People of Ohio, you are blessed to have someone actually worth voting for. (Yes, yes, I know Dennis Kucinich is also from Ohio – imagine two candidates worth voting for!)

      If the reference in Point #1 to Glass-Steagall, the critical Depression Era legislation that protected your bank account from financial fraud for half a century until eliminated by a cabal of Washington lackeys serving Big Finance at the turn of the century, leaves you confused, read “Another Weapon for OWS: Pull Your Money Out of BoA.”

      Concerning “too big to fail,” see “Too Big to Exist.”

      More Bank Fraud

      The latest bank scandal, concerning Belgium’s Dexia, suggests that Europeans learned nothing from the 2008 financial crisis brought to them by the U.S., and now it’s our turn to get the favor returned.
      You may not care about every little example of criminal collusion between rich bankers and politicians who conveniently (for their careers) govern for the good of those same rich bankers, the whole group carefully practicing joint fraud for profit and using taxpayer funds to pay themselves back whenever they gamble wrong and lose money.
      No doubt even that one sentence has made your eyes glaze over. So stop reading if you dont really want to know the tawdry details of the latest government bailout of a bank Belgiums Dexia. Just realize this: Dexia is spelled A.I.G, and when A.I.G. collapsed in 2008 and was be bailed out by U.S. taxpayers (courtesy of Bush and Obama), the end result was some 10,000,000 unemployed Americans and a pile of foreclosures so big that those houses are still sitting empty and rotting. Unless you were on the moon for the last three years, you already know this story and can guess where we are, once again, headed, so I will not bore you with the details about Dexia.
      The bottom line is that Europe evidently learned nothing from watching U.S. politician-banker complicity in fraud at popular expense in 2008, even though the resultant financial crisis hit them. Now it is the turn of the U.S. to be hit by European politician-banker complicity in fraud:
      • Bankers are still committing financial fraud;
      • Politicians are still covering up this fraud even when reported by government regulators;
      • When the bills come due at these gambling firmsah…“banks, governments are still handing taxpayer funds to the banks and allowing the criminals to walk away with their pockets stuffed full of what amounts to stolen cash.
      So here we go again. You may wish to stockpile some canned food, buy some non-Monsanto vegetable seeds, and start building a greenhouse. If you are a pessimist, you may wish to hire someone to dig you an old-fashioned well with a bucket (you know, the kind of well from which you can get water even if the electricity fails because, say, of social disruption and the interruption of government services).
      READINGS: For those of you who are masochists, further details are available via The New York Times, an Icelandic financial blog, the French paper Liberation, and this blog. Warning consumption of these items during meals may cause serious gastro-intestinal upset.

      On the secret bailouts Washington handed U.S. banks (beyond the well-publicized TARP bailout), see “Which Bank Is the Worst…”; for brilliant graphs showing the degree to which the rich are stealing the American Dream away from the other 99%, see “The Shocking Graphic Data….”

      On the confused, corrupted, and weak-kneed effort of the 50 state attorneys general to hold Big Finance to account, see the critically important analysis by Adam Levitin, “The Sweep It Under the Rug Housing Plan.” Levitin sums up the situation facing U.S. society nicely:

      Who should pay? This is basic justice. Those who broke the economy should pay to fix it.  You break it, you take it. We bailed out the banks because they are indispensible to the economy as a whole, but that doesn’t mean that they shouldn’t have to pay now. $20-25 billion is a fine price tag for robosigning. But this isn’t and shouldn’t be about robosigning. Robosigning was symptom of a much larger endeavor in reckless lending, in which corner cutting was the order of the day, from MERS to securitization paper work to no-doc loans.  All of this was done to maximize profits and to enable a housing bubble that was hugely profitable to a limited number of financial institutions and with extraordinary collateral damage.  Simply put, there needs to be accountability for blowing up the economy.

      Politicians With Real Solutions

      Some of the politicians in Washington really are earning their pay: keep an eye on the Congressional Progressive Caucus.

      Summarizing the Caucus’ new proposal to the Joint Select Committee on Deficit Reduction–which correctly advocates focusing on rebuilding America rather than slicing services to a population already under stress, CPC member Michael Honda observed:

      “We can ‘go big’ and address our budget deficits by allowing the unpaid-for Bush tax cuts to expire and ending our unpaid-for wars on schedule. Anyone who says we need to cut education, cut the social safety net, cut Social Security, Medicaid, Medicare or provide more tax cuts to the rich, is pushing a political agenda, not sound fiscal policy.”

       It is nice to see some politicians who are capable of taking the long view and understanding the inescapable linkage between domestic and foreign policy. Take five minutes and read their specific reform proposals.

      Particularly noteworthy proposals include:

      • eliminating welfare payments for Big Oil;
      • taxing Wall St. transactions related to “exotic” financial instruments (read: what caused the financial crisis);
      • ending U.S. wars on Iraq and Afghanistan.

      The weakest part of the proposal is in foreign policy, where the details are ignored and evidently misunderstood. The general approach is on target, but the CPC appears to have no real idea how to execute the needed reform of U.S. policy toward the Muslim world, and indeed does not even refer to U.S.-Iran relations despite the urgent need for rethinking that issue. Nevertheless, the CPC approach is a solid foundation for helping American society to get its feet back on the ground.

      Short Voter Guide for Restoring the U.S. Economy

      The mid-term future for the U.S., as the result of apparent short-term and secular negative economic trends amplified by political failure from both major parties (splitting conservative elite rule over the U.S.), appears highly unfavorable. Those who benefit have generated much confusion, but some simple steps toward a solution benefiting society can be taken by a concerned voter.
      Americans and the American Dream are currently experiencing death by soundbite. It is no wonder we are all confused. The very short video below of a recent Elizabeth Warren campaign talk on how we got in this mess and how to restore America constitutes the best “sound bite” answer I have heard. Listen, then read on.

      Elizabeth Warren on Restoring America

      Read together, two articles on economics in the October 9 New York Times paint a grim picture. David Leonhardt argues in The Depression: If Only Things Were That Good, [Sunday Review, 5] that secular trends during the Depression were actually much more positive that secular trends in todays increasingly hollowed-out economy. We fail to see the silver lining in the grim Depression because the positive secular technology-development trend in the 30s was hidden from our sight by the horrible short-term wave of highly visible unemployment. The second half of the economic picture is given by Jeff Sommer in An Ugly Forecast Thats Been Right Before, [Sunday Business section, 8] about the Economic Cycle Research Institutes current assessment that the U.S. is entering a second recession. The message of the two articles taken together, then, is that now both short-term (next couple years) and mid-term (next decade or two) economic prospects are bad. (Note that neither speaks to long-term capacity of a society blessed with an abundance of resources and at least minimal education and common purpose.)

      If one adds to this dismal economic forecast for the next generation or so the evident continuation of Government failure (whether one attributes that to intentional politician greed or simple incompetence) to address the problems society is facing, a positive outlook is hard to sustain.
      What should a voter do? The key to understanding the mess is avoiding being tricked into buying false categories (e.g., big government vs. small government, conservative vs. socialist, good vs. evil). Such simplistic sound-bite categories serve only to confuse. Rather than arguing over the size of government, consider what you want government to do and what you are willing to pay for it (e.g., for schools, roads, defense, protection of the air you breathe, protection from criminals). Rich conservatives love big government when it puts money (e.g., bailouts of Wall St., tax havens for Big Oil) in their pockets. Rather than arguing over good vs. evil, ask how others see their world, ask who benefits, then and search for mutually beneficial outcomes.
      More specifically, here are a few straightforward clues to identifying good leaders:
      First, demand leadership that concentrates on rebuilding national infrastructure rather than waving the red flag of small government; those who tout small government usually want welfare for the rich and small government for the poor.
      Of course an active government needs money. So, second, look for candidates who admit that this money can only come from a combination of taxing the superrich and from our grossly fattened-up military budget. That of course will entail redesigning foreign policy to rely primarily on diplomacy (i.e., working to find win-win solutions) rather than force to maximize one-sided benefits. A good starting place might be to address the monstrous army of expensive private contractors (many outright mercenaries) holding quarter-million-dollar-a-year jobs in Iraq and Afghanistan that either locals or U.S. civil servants should be doing at far less cost and with far greater responsibility than out-of-control private companies whose goal is profit.
      Third, government regulation must, once again, replace the legal piracy known as trusting corporate America.  For a start, look for politicians who appoint financial watchdogs from outside the gang of foxes who brought us the recession in the first place, e.g., folks like Elizabeth Warren rather than Tim Geithner. Look also for leaders demanding that those responsible for causing the recession be held personally responsible in court. [On punishing financial criminals, see this small piece of good news.]
      Politicians make all this appear far more complicated than it really is, because winning the next election is almost universally more important to them than solving the problems and, all too often, because they intentionally caused the problems for their personal benefit in the first place. A solution is not impossible, but it seems very unlikely to appear by itself: the combination of negative short- and medium-term economic trends makes that point. To turn the U.S. around, you voters will need to get past sound bites and insist that politicians stop giving the abusive elite a free pass to use your tax dollars for their personal benefit.
      This essay offers some simple hints about how to start thinking about a solution to the U.S. economic debacle. Those readers who want more detail may wish to take a look at:
      Too Big to Exist, which proposes putting fat institutions on a diet;
      The Way Forward, a plan for restoring the U.S. economy by Nouriel Roubini et al.;
      Mayor Bloomberg and Occupy Wall Street By the Numbers, class warfare data from Juan Cole.