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(to be sent to Letter and copied to Martin Wolf)


Dear Sirs,

In his article today (" The Federal Reserve must prolong the party"), Martin Wolf refuses to acknowledge one obvious origin of the current financial crisis: the explicit policies of the Bush administration, pushed with the open support of the Greenspan Fed. These policies, via targetted tax cuts, massive corporate pork made possible by a war of choice, and lax monetary and banking policies, had as sole goal to make the rich richer. Stagnant wages, made possible by weakening of corporate regulation and increased access to the Chinese labor pool, were instrumental in making higher profits possible, and lax monetary conditions allowed bubbling financial asset values. Lower taxes made capture ofthat wealth easier forthe owner class, and share buybacks (instead of investment) was one of the preferred instruments.

The debt bubble also had the great advantage of making it possible to hide from most Americans that they were not sharing in that wealth capture, by allowing them to keep on consuming - by spending money provided by easy debt instead of by actual income. The fact that spending was underpinned by debt and not by income, which is an invitable result of the neoliberal pollicies pursued, is the main cause of the American deficits and the need for the rest of the world to finance them. As US spending is directed at manufacturing based in other countries, their complicity has been easy enough to procure.

At this stage, the imbalances are totally unsustainable and need to be corrected - in fact, they should have been several years ago. That correction will be painful enough; arguing for yet another round of the bubble merry-go round, will can only lead to a worse outcome in the end, is utterly irresponsible.

Amendments, comments, ideas?


In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 22nd, 2007 at 04:36:06 AM EST
"sole goal" and "owner class" are probably going to be red flags for the FT.
by Colman (colman at eurotrib.com) on Wed Aug 22nd, 2007 at 04:50:41 AM EST
[ Parent ]
"sole goal" can probably be replaced by "one of its implicit goals"

"owner class" - how about "those with substantial ownership of shares and other financial assets, a small minority even in the US"

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 22nd, 2007 at 04:54:05 AM EST
[ Parent ]
and feel like waging class war, in spite of commies being close to the top of my hate list. But hey, they're topped by feudalist, so I guess that's that.

These policies, via targetted tax cuts, massive corporate pork made possible by a war of choice, and lax monetary and banking policies, had as sole goal to make the rich richer. Stagnant wages, made possible by weakening of corporate regulation and increased access to the Chinese labor pool, were instrumental in making higher profits possible, and lax monetary conditions allowed bubbling financial asset values.

Too many "possible" in my opinion.

capture ofthat wealth easier forthe owner class

Should be

capture of that wealth easier for the owner class

and

an invitable result of the neoliberal pollicies pursued

Should be

an inevitable result of the neoliberal policies pursued

To the barricades!

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Aug 22nd, 2007 at 05:04:54 AM EST
[ Parent ]
Did someone say class war?


"If you know your enemies and know yourself, you will not be imperiled in a hundred battles." Sun Tzu
by Turambar (sersguenda at hotmail com) on Wed Aug 22nd, 2007 at 07:13:26 AM EST
[ Parent ]
Dear Sirs,
In his article today (" The Federal Reserve must prolong the party"), Martin Wolf refuses to acknowledge one obvious [cause] of the current financial crisis: the [] policies of the Bush administration, [carried out] with the open support of the Greenspan Fed. These policies, [through tax cuts targeted at the well-off , massive corporate pork made possible by a war of choice, and lax monetary and banking policies, had to making the rich richer as their goal] . Stagnant wages, made possible by weakening of corporate regulation and increased access to the Chinese labor pool, were instrumental in making higher profits possible, and lax monetary conditions allowed bubbling financial asset values. Lower taxes made capture of that wealth easier for the rich, and share buybacks (instead of investment) [have been] among the preferred instruments.

The debt bubble also had the great advantage of making it possible to hide from most Americans that they were not sharing in that wealth capture by allowing them to keep on consuming through spending money provided by easy debt instead of actual income. That spending was underpinned by debt and not by income, which is an inevitable result of the neoliberal pollicies pursued, is the main cause of the American deficits and the need for the rest of the world to finance them. As US spending is directed at manufacturing based in other countries, their complicity has been easy enough to procure.

The imbalances are totally unsustainable and need to be corrected - in fact, they should have been several years ago. That correction will be painful enough; arguing for yet another round of the bubble merry-go round, which will can only lead to a worse outcome in the end, is utterly irresponsible.

by Colman (colman at eurotrib.com) on Wed Aug 22nd, 2007 at 04:57:36 AM EST
[ Parent ]
how do I correct this bit?

"had [] making the rich richer as their goal"?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 22nd, 2007 at 05:04:43 AM EST
[ Parent ]
Yes, sorry.
by Colman (colman at eurotrib.com) on Wed Aug 22nd, 2007 at 05:06:16 AM EST
[ Parent ]
the rich richer

the investment class richer - at the expense of everyone else who participates in the economy.

by spending money provided by easy debt instead of by actual income.

by hooking consumers on a habit of corrosive easy debt instead of boosting spending by improving their real incomes.

The fact that spending was underpinned by debt and not by income, which is an invitable result of the neoliberal pollicies pursued, is the main cause of the American deficits and the need for the rest of the world to finance them.

The fact that spending was underpinned by debt and not by income is an invitable result of the neoliberal pollicies pursued and the main cause of the American deficits, as financed by the rest of the world.

arguing for yet another round of the bubble merry-go round, will can only lead to a worse outcome in the end, is utterly irresponsible.

arguing for yet another round of the bubble merry-go round [will] can only lead to an even worse correction, and is utterly irresponsible.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Aug 22nd, 2007 at 05:28:12 AM EST
[ Parent ]
It is correct to comment on the cost of Chinese labor.

But it should be commented on as well that the Chinese have made incredible investments into their infrastructure, both in the manufacturing plants and equipment, and also in the cities and roads and subways and and and. Point being, (and I have no figures at hand to back this up), I am certain that they have been making the capital investments that the Americans have not...that the Americans have been doling out to the vulture class.

China only recently became a net creditor to the world, but they have been a net creditor to the US for quite a while. They have been buying from the EU, though again, I don't have the data stored and google is filled with too much to winnow.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Wed Aug 22nd, 2007 at 05:49:23 AM EST
[ Parent ]

Dear Sirs,

In his article today (" The Federal Reserve must prolong the party"), Martin Wolf refuses to acknowledge one obvious cause of the current financial crisis: the policies of the Bush administration, carried out with the open support of the Greenspan Fed. These policies, through tax cuts targeted at the well-off, massive corporate pork made possible by a war of choice, and lax monetary and banking policies, had making the investment class richer as their goal - at the expense of everyone else who participates in the economy.

Stagnant wages, made possible by weakening of corporate regulation and increased access to the Chinese labor pool, were instrumental in making higher profits possible, and lax monetary conditions allowed bubbling financial asset values. Lower taxes made capture of that wealth easier for the rich, and share buybacks (instead of investment) have been among the preferred instruments to get it done.

The debt bubble also had the great advantage of making it possible to hide from most Americans that they were not sharing in that wealth capture, by hooking consumers on a habit of corrosive easy debt which substituted for actual income increases. The fact that spending growth was underpinned by debt and not by income is an invitable result of the neoliberal policies pursued and the main cause of the American deficits, as financed by the rest of the world. With US spending directed at manufacturing based in other countries, their complicity has been easy enough to procure.

The imbalances are totally unsustainable and need to be corrected - in fact, they should have been several years ago. That correction will be painful enough; arguing for yet another round of the bubble merry-go round, which can only lead to an even worse crisis later, is utterly irresponsible.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Aug 22nd, 2007 at 06:32:34 AM EST
[ Parent ]
OK, sent as posted above, minus a typo or two.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Aug 22nd, 2007 at 09:29:23 AM EST
[ Parent ]

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