Barko & Sarko Capitalism - Socialism With a Twist

http://www.brusselsjournal.com/node/4226

From Meccania to Atlantis - Part 13 (2): Harpo, Gekko, Barko, Sarko

Chapter 2: Barko = Fundamental Transformation 2 + 3 = 5.03820

By Takuan Seiyo

The Brussels Journal

12/18/09

There was a time, before every car had a bumper sticker that read, “Even my llama voted for Obama,” when Americans preferred to affirm in this manner some essential and incontrovertible truth, like “S**t happens.” Swayed by their ruling elites and boob tube to take out reverse mortgage loans to buy swamp vacations condos and 3-ton SUVs with all the desert options for driving to MacDonald’s, they lost their mind. Their political and opinion-making leaders, all graduates of elite universities, all counseled by PhD’s from even more elite universities -- they too had forgotten the simple truths one used to learn in kindergarten.

But the Chinese have not forgotten, and they are quoting Benjamin Franklin to the American fools. “He who goes borrowing, goes sorrowing,” admonishes Cheng Siwei, ex-vice-chairman of the Politburo of the Chinese Communist Party. Beijing University students laugh at U.S. Treasury Secretary Geithner when he reassures them with the transparent fib that his government believes in a “strong dollar.” And Americans swindled by their own government unto the nth generation, take solace in lampooning their Loon in Chief -- here being told by “Hu Jintao”, ”I am noticing that each of your plans to save money involves spending even more money."

To construct an economy whose survival depends on the ability of both government and citizens to borrow money and spend it on mad social engineering programs and redundant imported junk is the stuff of retarded children’s fancy. After that house of cards has collapsed, for America’s government to borrow and print additional trillions of dollars, and to sprinkle that onto failed, mismanaged corporations, corrupt Communist labor unions, cesspool banks, and racial extortion racket like ACORN, is nothing short of terminal lunacy. Or something more sinister.

In 2002, the U.S. national debt was close to $6 trillion. By November 2009, it had doubled to nearly $12 trillion. The debt is running so fast that it’s expected to pass $18.6 trillion in 2014. But that too is a lie – Snatcher State (1) is founded on lies. For to measure the true national debt of the American Leviathan, one would have to add other U.S. obligations that with respect to unfunded pension and health-care liabilities alone run over $99 trillion.

The true measure of the United States’ insolvency in November 2009 was $111 trillion, or 5.038 to the power of 20. Leviathan says, “Sorry, our forecast was 5, but it turned out to be 5.038.” Pundits then comment on the debt overrun at 5.038 and find that it’s no big deal. But Leviathan has neglected to mention the tiny superscript mark next to 5.038 that makes it $111 trillion. Maybe if Orwell’s 1984 were called 2009, Winston would have been tortured by the state for writing, “Freedom is the freedom to say that two plus three is five, not 111 trillion.”

Generations of American politicians and bureaucratic barons have defined the government’s liabilities in such a way as to exclude unfunded retirement and health care obligations. Try this creative accounting with your espresso cart business, and see how long you can stay out of prison.

What’s $111 trillion? It’s one of those things that, to grasp, one has to stack up Eiffel Towers all the way to Pluto, or to count seconds backwards until a few months before the Big Bang. It’s an obscene number. It’s nothing compared to the $1.4 quadrillion value of outstanding derivatives, but one insane balloon does not excuse another.

Gordon Gekko was made into a symbol of greed only because a brain-altered leftie, Oliver Stone, made the film. The banksters are indefensible, that’s true. But they are merely little covetous geckos compared to the rapacity of whore politicians and government pashas who lust for power, permanence of power, perks of power, and the buttered money crumbs that fall their way from the table de luxe where the really smart guys dine.

The Club of Crooks and Loons thrives by beggaring the middle class to fund programs that keep enough voters happy to get the Club re-elected. It raises the funds by direct wealth transfer through “progressive” (double meaning) taxation, and by borrowing and printing, i.e. creating money out of nothing. The latter is a form of stealth progressive taxation. And the purpose is always the same: reckless spending.

Manifestly, this “stimulates” the economy with plentiful credit and cheap money. But over time, this robs the middle class by diluting its savings and fixed income through inflation and stealth devaluation. It undermines society as profoundly as the profligate expenditures of the latter Caesars did Rome, financed as they were by shaving the diameter and falsifying the silver and gold content of the coins of the realm.

But the Club doesn’t care. The Crooks know that it’s in their re-election interest to conjure and spend vast sums of money. For the same reason they are keen on replacing the white, largely self-reliant majority with a more “diverse,” imported electorate, inured to government handouts robbed from the dispossessed middle class. And the Loons are happy that such spendin’ and diversifyin’ furthers their pet causes of social justice, equality, peace, and penance for whitey. Each one of these words and concepts is a hypocritical euphemism worthy of Molière.

There has been much media chatter that the current travails of financial capitalism are a crisis of the “free market” system. In a recent BBC poll of 29,000 people in 27 countries, only 11% opined that free-market capitalism works well. 23% saw capitalism as fatally flawed. In 15 of the 27 countries, majorities wanted their government to increase its direct ownership of the main industries. Although only 11 of the 23 sampled countries were of Euro-origin, the pervasive ignorance embedded in these opinions was evinced in this comment by Doug Miller, chairman of the company that conducted the survey: “It appears that the fall of the Berlin Wall in 1989 may not have been the crushing victory for free-market capitalism that it seemed at the time.”

“Free-market” capitalism? In a system where the government has a monopoly on the price and quantity of money, which it misprices and misprints as a rule? In a system where the government has just bailed out the crooks and the fools from the free market’s judgment, and charged the costs to the productive and prudent?

Greedy financial capitalism has exploited and exploded the credit bubble. But every bubble of the last 20 years has been inflated by the constant expansion of cheap credit by central banks, particularly the U.S. Fed. Had (Federal Reserve Chairmen) Greenspan and Bernanke not flooded with “liquidity,” the Gekkos would not have had the practically limitless free money to play speculative games with.

This is the second systemic sabotage of free market economy even in the freest country of all – the United States. The first one is the government’s persistent failure to exercise its legislative and enforcement powers to restrain fraud, graft, market manipulation and excessive risk taking with other people’s money. A big part of the Crooks and Loons’ scam is that they leave free what they ought to control, i.e. the borders, Islamic infiltration, criminal gangs, bank reserve ratios, derivatives, speculation on margin -- but they control what they ought to leave free, i.e. interest rates, gender and race-blind meritocracy, the people’s right to armed self-defense, and more.

To compound the disaster, after their bubble imploded, the Keynesian monetary drones threw $23.7 trillion’s-worth of moneta (i.e. coins) -- in the U.S. alone! -- to extinguish a conflagration of debt with more debt. None of them saw the advance warning signs of the biggest financial crash in history, but all of them now know how to cure it.

The economy is an organic entity. It gets irrationally exuberant and drunk on cheap money, if there is a misguided central bank providing it. But if the economy gets a chance to sleep through the hangover, fast for a year or two on bread and water, the toxins – what “Austrian” economists call malinvestments -- are flushed out of the system and the patient wakes up full of vigor to start a new day afresh.

If instead of leaving it alone, the government plies the economy with the very drug that has caused its crash, it produces a jolt of activity today, and a bigger crash tomorrow. It’s like pumping a heroin addict full of opium, to cure the addiction. It’s obvious therefore that if the Monkey Business (2) clowns continue “stimulating” the economy they already destroyed through two decades of overstimulation, they must have either a mental deficiency, or a hidden agenda, or both.

Barko, spender

Barko is Barack Hussein Obama -- Great Leader, The One We Have Been Waiting For or, in implanted childrens’ devotionals, “Mmm, mmm, mmm, Barack Hussein Obama.” Mr. Obama’s unique historical significance is as a “community organizer” brought to the levers of supreme power by a stroke of good fortune and able, therefore, to accelerate the Gramscian Long March beyond the wildest dreams of any American socialist radical who ever lived.

Barko is also a phenomenon that extends beyond Mr. Obama himself. It includes what is known as the Obama-Chicago Machine-Pelosi-Reid political axis, its crypto-socialist billionaire backers and upper class “progressive” acolytes, the pierced-and-tattooed slackers, militant labor and civil service unions, socialist NGOs, and the tens of millions of non-white minorities for whom the Barko coalition is a ticket to bounty requisitioned from others.

The Left’s strategy has not changed much since the 1930s. They push government spending ever higher, and then define budget deficits as the problem. When fiscal conservatives point out that the overspending causes the deficits, the Left labels that as extremist, supporting slavery and homicidal. When in power, the Left ratchets up the spending on its clients and picks the pockets of the productive citizens out of a faked concern for the “deficit gap.”

The one rule is that expenditures are never reduced, except as a strategic ploy. If an emergency forces a reduction, what’s reduced is the police, the garbage pick-up, the libraries, but never the budget-busting public workers’ pension programs, or the legions of $150,000-a-year deputies of bureaucrat deputies, hired and retained through thick and thin to fulfill the Holy Grail of Body Snatcher creed: “balance” between competent straight white males and quadriplegic black Muslim lesbians.

But there comes a time when the spending is no longer an exercise in cynical egotism or delusional ‘social justice,’ but a deliberate battering ram with which to fell a nation and steal its future. There is no precedent in history to the reckless magnitude and speed of the Obama–Pelosi regime’s spending. It’s impossible to capture concisely all the details of the confetti curtain of $100 bills streaming day and night from ten million Bernanke helicopters, but a few mileposts are worth mentioning:

The Senate of the most indebted nation in history, a country staggering under mountains of debt that it has no viable way of repaying, continues to pass Titanic spending bills that just in the first nine months of 2009 included:

$350 billion Wall Street bailout extension
$787 billion “stimulus” package
$400 billion, earmark-infested omnibus spending bill
$6 billion to federalize charities and pay volunteers
$109 billion loan to the International Monetary Fund
$3 billion for “Cash for Clunkers”
$400 million in corporate welfare to the tourism industry
$4 billion bailout of the Postal Service

In what the New York Post called “a stimulus without the stim", the federal government has spent a half-billion dollars on ten large government stimulus contracts in New York City and Long Island that created 54 jobs. That comes to $9 million per job.

Overall, the government has spent $246,436 per each of the 640,329 jobs it claims to have saved or created so far. That's a pretty costly stimulus, a government Ponzi scheme of printing money and so robbing those who hold previously printed money, then flinging the new money about in order to cover up the sorry effects of the government’s own prior malfeasance and stupidity.

Each buyer of the 690,000 vehicles that were sold during the “Cash for Clunkers program” (gov. propaganda here) received a government subsidy of $3,500 - $4,500, at a total cost to the taxpayer of $3 billion. But since the majority of these beneficiaries would have bought their cars anyway, the 125,000 who were actually induced by the government to buy cost the taxpayer $24,000 each.

Fraud in the “$8000 ‘stimulus’ to each new home buyer” program is currently assessed at $500 million. Thousands of such $8,000 tax credits have been issued to illegal aliens, children, and people who had not bought a house – the latter including at least 53 IRS [Income Tax Bureau] employees. That’s what happens when a government rather than the free market mechanism dispenses money.

Obama has announced a plan to send 78 million American seniors a check for $250 each. That’s a paltry 19.5 billion dollars. In Detroit, thousands line up for “Obama money,” that they believe is a personal gift from The One. In Tampa Bay, millions are wasted to subsidize beauty school tuition for beauticians for whom there are no jobs. Maybe that’s the ultimate Monkey Business haircut.

As if this weren’t enough, the lunatics in the House of Representatives write a 2000+ page bill that nobody has read and pass it at 23:00 on a Saturday night. They propose to spend another $1.2 trillion on health care for the 12.5% of Mexico’s population (3) that prefers free American doctors, in a reform that would actually worsen everything that’s already bad in the American healthcare system (4), explode U.S. debt, increases taxes, and kill jobs. Two Saturdays later, the Senate gives its stamp of approval, in a wheeling-dealing process that involves buying one senator’s vote with a $300 million bribe to Louisiana, twenty times the amount of the original Louisiana Purchase.

And since this is being too niggardly with the taxpayer’s money, Democrat Snatchers in the Senate push through a Climate Change bill that will cost at least $3.6 trillion, such estimates always proven 20 years later to have been too hopeful by a factor of eight.

But they are just getting warmed up. “After flurry of stimulus spending, questionable projects pile up,” reports the Washington Examiner. The “projects” range from $300,000 for a GPS-equipped helicopter to hunt for radioactive rabbit excrement, to $800,000 for the John Murtha Airport in Johnstown, Pa. that serves 20 passengers a day. Democratic Congressman Murtha deserves his name on an airport because he is a crook of such staggering proportions that even The Huffington Post – no foe of Democrats – gives him his own Web page.

While all this is going on, in a brave experiment to disprove the unfashionable “guns–or-butter” maxim , the U.S. wastes $2.6 billion a day to build the unbuildable nations of Iraq and Afghanistan [total wasted in Iraq alone: $53 billion, so far], promises to double its foreign aid to $50 billion, to initiate hush money to Third World kleptocracies at [a big part of] $100 billion per year, and generally does everything that the speed of its Bureau of Engraving and Printing presses -- 8,000 sheets of paper money per hour – makes possible.

This is madness for the ages, stuff for future historians of civilizational collapse. And it’s not economic ignoramuses who are doing this. Ben Bernanke, Chairman of the U.S. Federal Reserve, was a professor of Economics at Princeton University. Timothy Geithner, U.S. Secretary of the Treasury, has an M.A. in economics. Paul Krugman, who habitually criticizes these two for not spending enough, is the 2008 Nobel laureate in economics. Even President George W. Bush, who started this insanity in earnest, has an MBA from Harvard.

The unfolding disaster is tied in part to false economic models of credentialed “experts,” full of the particular arrogance of people who have read 10,000 books but never milked a cow. Like the medieval alchemists, the Greenspan-Bernankes serving Snatcher State still look for the philosopher’s stone – and find it in John Maynard Keynes’s theory that government meddling and deficit spending is not the leaden hobble that a 9-year-old with a piggy bank would recognize, but pure gold.

Pure gold it is. Since gold is an insurance against the government’s follies and depredations, in the first 10 months of the Obama presidency the price of gold went up by 37%.

The fatal conceit of learned socialist bunglers is personified in Dr. – in history, of all things -- Gordon Brown. As the British Chancellor of the Exchequer, between 1999 and 2002 Brown sold 60% of Great Britain’s gold reserves at an average price of $276 an ounce. He had actually managed to drive the price to its lowest in 25 years, still called "Brown Bottom," by announcing his intentions in advance.

By 1 December 2009, gold had risen by 335% and stood at $1200 an ounce. And Dr. Brown, having managed to trash Great Britain in many other ways since, is now its Prime Minister. Full of grandiose ideas to redeem whitey and uplift the world, among Brown’s other flashes of brilliance has been his effort to get the West’s then-solvent countries to give away much of their gold, via the IMF, to relieve Third World debt. Since this particular outflow to the Third World did not work out, Brown with other Labour leaders have since done their best to destroy Great Britain via a demographic inflow from the Third World.

The gross mismanagement of the West’s real assets by big business leaders has been far exceeded by the gross mismanagement of the West’s economies and societies by political leaders and bureaucrats. This starts with their Keynesian conviction that they know how to manage the economy. Friedrich von Hayek called it “the fatal conceit." The scope of this term ought to be enlarged to include also social capital, i.e. common ethnic roots, cultural consensus, shared norms of behavior and the resulting social trust – for these invaluable social assets have been similarly destroyed by the fatally mad ruling elites.

The 1st Great Depression was not a failure of capitalism but a failure of the leftists elites to understand the nature of both capitalism and their own limitations (5). History’s reproach to the foolish government tinkerers may be deduced by comparing the “Panic of 1920” with the “Panic of 1929.” The first one subsided quickly after President Harding’s government left things alone except for cutting taxes and spending. But the Panic of 1929, followed by much government fiddling, tampering and burning huge sums of money, lasted for the better part of two decades and stopped only because of World War 2.

Government meddling, bailing out and “stimulating” is pulling the world straight into the second Great Depression through a fake, “stimulated recovery,” as though there is no lesson to be drawn from the first one. However, the government’s essential incompetence is a Harpo clown issue, and we have covered that already. But Barko and Sarko, the one a sinister destroyer, the other a Body Snatcher lunatic, are stacked on top of the Harpo bumbler.

Barko, waster

It takes the two meanings of “to waste” to describe what the leftoid American regime is doing to the country it loves to hate. For it’s a wipeout, a gigantic destruction by profligate mega-squandering.

What separates the wasting of the Barko socialists from that of the faux Sarko conservatives (like Nicolas Sarkozy) is speed, quantity, and intent.

The Barkos wreak accelerated destruction with intelligent purposefulness in order to collapse Western society. Their playbook has been authored by Antonio Gramsci, Herbert Marcuse, Saul Alinsky, even a convicted thief, Robert Creamer, a darling of Chicago-style “gangsta-progressives.” Barkos even have a conspiratorial script, the Cloward – Piven Strategy.

The Sarkos, on the other hand, destroy incrementally, with benign intent -- a mixture of bleeding heart liberalism and stupidity. They hew to John Maynard Keynes, Big Business, and lefto-Christian dhimmo-bishops like Nick Baines or Godfried Danneels. There are conspiracies attributed to this side also, such as the “Bilderbergs” and other names given to a behind-the-curtain group of powerful string-pulling bankers.

In the United States, George W. Bush was the last Sarko in the White House, and there are Republican Sarkos serving now in the U.S. Congress. But as the country is struggling with its biggest crisis since World War 2, it is firmly in the grip of Barack and the Barko Party.

As if some of the finest financial minds of the United States (e.g. James Grant, here ) have not warned of courting disaster, as though millions have not voiced their outrage in thousands of Tea Parties, Barko, like a windup thieving magpie, goes forth. As of 8 December, there are new Obama plans to “spend our way out of this recession."

Even as voices of warning and dire prediction intensify, the Fed’s Ben Bernanke and U.S. Treasury’s Tim Geithner are intensifying their actions that ignore and defy the warnings. Even as lone Congressmen sound the alarm about the evil circus they witness daily on the job, a new 2500-page Omnibus spending bill is making its way through the Capitol like a tasty rat through a python’s practiced colon. The bill, putting the match to the paltry sum of $446 billion, includes 5,200 earmarks for things like a $17 million gift to Ireland and $3 million for bike racks in Washington DC.

And the Senate is hard at work to “clear away” a Republican filibuster of a $1.1 trillion end-of-year spending bill rewarding most federal agencies with generous budget boosts and funding such Barko staples as abortions and hard-drug needles. As well, the barking mad party in Congress under Barko’s baton is pulling out all stops to ram through what will be one of the main anchors of Socialist America: the health care “reform” with its grossly underestimated price tag of $1.2 trillion.

The same government that wants to mismanage the $2.3 trillion (annual spending) healthcare industry, also drives hard to control the carbon emissions of the American economy – which means, really, to control the American economy. This, after having taken over much of the American auto, banking and insurance industries already. And that’s the government that has just agreed to pay $3.4 Billion to settle a lawsuit relative to its mismanagement of the revenue in the American Indian trust fund.

Not by coincidence, the same crazed Leviathian that has just driven the U.S. mortgage market and the world’s economy with it to implosion, continues to subsidize mortgages for people who do not qualify for loans by prudent banking criteria. U.S. Federal Housing Administration has guaranteed 37 % of all residential mortgage loans in 2009. At least 20% of this $725 billion mortgage portfolio will end up in default and another bailout by the U.S. taxpayer.

7.2 million jobs have been lost in America since recession began. The official unemployment rate, at 10.2%, is the highest in 26 years. But even the government admits that the true unemployment rate, including workers who have given up looking for work, is 17.5%. 22% is the truthful rate, per Shadow Government Statistics.

The only area where employment is booming is Washington, DC. At 6.2%, it has the lowest unemployment rate of all large American cities. The two million federal employees, including 25,000 new hires just since December 2008, have recently gotten a 2% wage increase. Over 10,000 of them -- an increase of 450% in just two years -- make more than $170,000 per year.
In this sense, the Barko regime has mounted a coup d'état in which the état is the instigator and beneficiary of the coup. But there is far more to it. It shows in the urgency and simultaneity of the unprecedented spending on very large society-transforming projects, any one of which alone would be perilous to America’s finances and social viability.

All of the spending iterated above has been initiated by the government of a country amidst the greatest economic crisis in 70 years, while fighting two hot wars and three cold ones, reeling at home from a shattered social and cultural consensus, and crippled by the breakdown of such bedrock institutions as public education that educates, and civil service that serves.

It’s this time that the Barko regime has chosen for smashing and rebuilding the largest sector of the American economy, healthcare. It’s this time they have chosen for closing Guantanamo and holding trials for Al Qaeda jihadis in New York. The idea is not just to burn another quarter billion for the trials and the attendant security, but also to destroy, through the judicial discovery process, the clandestine capabilities of America’s security apparatus.

It’s this time too, early next year, that they have chosen to ram through Amnesty for 15 -20 million illegal immigrants. 60% of those are semi-literate Mestizos and 5% are jihadis-in-waiting. And 15 million translates into at least 60 million through gradual “family reunification” over just 20 years. It’s this kind of strength in diversity that America is wanting so much.

All Body Snatchers who have access to a microphone crow about this coming epiphany, but the most instructive gloating comes from Janet Napolitano. In a typical inverse reality mode of Snatcher State, Ms. Napolitano is in charge of domestic security for the United States, tasked among others with protecting its borders and enforcing its immigration laws. “Timing is everything in the arts of war or politics”, said Ms. Napolitano in her speech on the blessings of busting the United States for good with a demographic bomb too, on top of all the other heavy petards.

The art of war – if only the foggy “conservatives” had a clue.

It’s within the same time bracket that the Barko people chose to unleash the Cap-and-Trade economic catastrophe on their country, under the risible pretext that their failure to do so would lead to a catastrophe. It’s in this time bracket that Mr. Obama chose to appoint an Afrocentric Black Communist, Van Jones, as “Green Jobs” Czar, and a Socialist International operative, Carol Browner, as “Energy and Climate Change” Czar. And that confluence of Third-worldism, socialism and climate change hokum provides the clue as to what the monetary bonfire of hokum stimulus is about too.

Mikhail Gorbachev, no stranger to Trotskyite thinking, has reportedly said that the threat of environmental crisis will be the “international disaster key” that will unlock the ‘New World Order’ (6). But even without Gorbachev’s decryption, that key is on plain view every day during the United Nations-staged Copenhagen climate commedia dell'arte.

The idea is to transfer wealth from the rich to the poor – on a scale undreamt of even by Karl Marx himself. All in the name of equality. No longer the equality of a German coal-mine owner and a German coal miner, but the equality of a German surgeon and a Gambian porter. From each according to his ability, to each according to his need, globally. Or, to paraphrase Charles Krauthammer, taxing hard-working citizens of Western democracies in order to fill the treasuries of Third World kleptocracies.

This is the biggest heist in the history of the world, and the Holy Grail of socialists everywhere, not the least at Socialist International. And the United States is the one obstreperous territory that has stood athwart the road to this progressive progress, starting with George W. Bush’s refusal to sign the Kyoto Protocol.

That’s why the 2009 Nobel Peace Prize went to Barack Hussein Obama. Thorbjørn Jagland, who presided over this travesty, had been, among his other socialist posts, a vice president of the Socialist International. And Barko with his crew steer America’s ship now, with an intention that presidential candidate Obama hinted to the knowing so vividly.

[Thorbjørn Jagland "has been one of several vice presidents of the Socialist International...He has stated that the left wing in Norway does not use Socialist International enough." See: Thorbjørn Jagland, Wikipedia, at: http://en.wikipedia.org/wiki/Thorbj%C3%B8rn_Jagland . See also Dan Calabrese, Who is Thorbjorn Jagland? Obama’s Nobel patron is a long-time leader of Socialist International, The North Star National, (Oct. 10, 2009), at: http://www.northstarnational.com/2009/10/10/thorbjorn-jagland-obamas-nobel-patron-long-time-leader-socialist-international (reproduced below)].

America’s backbone is its middle class of mainly white, Christian anti-socialists. The last such backbone remaining in the world, with the possible exception of Australia. Crush it, and you have shattered the last obstacle standing before The New World Order. Break it, and you have changed the course of history as profoundly as the French Revolution has, in the same Jacobin direction.

That’s what the spending has been all about, and that’s why they stuffed so many back-breaking projects into the same impossible time frame. That’s why Rahm Emanuel, Obama’s majordomo, said that no serious crisis should go to waste.

And that’s why the next chapter in our contrarian cogitations will bear the title Requiescat in pace. The key to ending this nightmare is not in putting one’s electoral faith in a Sarko to replace a Barko while Harpo is running around in the background, but in recognizing that the whole enterprise is a mad circus decayed beyond redemption. The only true choice left is to get up and walk out of the circus tent.

Previous articles in this series can be found here.
-------------------------------------------------------------------------------------------------
(1) The basic analogy reverts to Part 1, where we cited the film Invasion of the Body Snatchers. In the film, alien “Body Snatchers” produce giant legume Pods that replace living people while appearing to be identical to them. From the Pods develop the new Body Snatchers who cultivate further Pods etc. Snatcher State, per this central metaphor, is a state governed by an elite that seems to be so crazed and indifferent to Earthly reality as if it had come from outside our galaxy.

(2) Monkey Business is the metaphor used in Part 13(1) and taken from the Marx Brothers film, “Monkey Business,” including its “haircut” scene.

(3) See map.

(4) See assessment by the Dean of Harvard Medical School.

(5) Space does not permit for summarizing the proof here, but it may be found, among others, in Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867–1960, Princeton University Press, 1963 (more here) and in Amity Shlaes, The Forgotten Man: A New History of the Great Depression. And Prof. Walter Williams has made the point that until the 1st Great Depression, all financial crises since 1787 had subsided quickly due to no governmental intervention in the economy.

(6) Quoted in Marilyn Brannan, “A Special Report: The Wildlands Project Unleashes Its War On Mankind,” Monetary & Economic Review, 1996, p. 5.

-------------------------------------------------------------------------------------------------

Are Bush Calls For Defense of Capitalism Too Late, Amid Euro-Socialist, Sandanista and US Congressional Clamor for Regulate, Tax & Spend Policies?

http://www.bworldonline.com/BW111708/content.php?id=145

Saving capitalism

By Filomeno S. Sta. Ana III

Business World Yellow Pad

Vol. XXII, No. 81

Monday, November 17, 2008 MANILA, PHILIPPINES

The title of an Associated Press report was: "Bush warns: Don’t disturb capitalism." The story, however, did not state whether George W. Bush really uttered those words. Yet, the title captures the gist of Bush’s speech that he delivered at the Federal Hall on Wall Street.

The speech was intended to communicate the US position for the meeting of the G-20 countries — a group of highly developed countries and some influential developing countries called emerging markets. The crucial G-20 meeting was an occasion to address the collective action problems in response to the global financial and economic crisis.

The AP story quoted Bush extensively:

"We must recognize that government intervention is not a cure-all." "Our aim should not be more government. It should be smarter government." "It is true that this crisis included failures, by leaders and borrowers, by financial firms, by governments and independent regulators. But the crisis was not a failure of the free-market system. And the answer is not to try to reinvent that system."

The lame-duck president is living in a different world. He wears blinders. He wishes to apply his ideology at all times. But his conservative economic creed of less government loses relevance in times of economic crisis.

Bush dislikes more government. But what do you call the US government bailout of financial institutions, amounting to more than US$700 billion? The fact is, the bailout was a necessary though insufficient condition, to restore confidence in the financial system and keep credit flowing, so as to resuscitate the real economy.

And to disparage government intervention, Bush uses the trick of inserting a red herring in his speech: "government intervention is not a cure-all." Only dumb people believe in a panacea.

But Bush is correct to say that we need "smarter government." Indeed, a smarter government would have taken precautionary measures through policy and regulation and could have thus averted a deep crisis. Unwittingly, Bush’s statement about "smarter government" merely confirms that he or his government isn’t smart. The US and the rest of the world are fortunate for two related reasons: First, Bush would no longer be around to preside over US policies and institutions. Second, the successor is Bush’s opposite.

One metaphor that best describes the current crisis of capitalism is the "gale of creative destruction." Raul Fabella, professor at University of the Philippines School of Economics, reintroduced this metaphor when he spoke in a public forum about the Philippine economy. Raul borrowed the term from Joseph Schumpeter. The "gale of creative destruction" is precisely what makes capitalism resilient. Destroy the old and build the new. Thus, the current crisis will destroy the free-market model, which was dominant for at least two decades, and deflate its "triumphalism." Supplanting it will be a system that enhances the role of government, institutions, and regulation in a market economy.

Recent actions taken by the richest countries — e.g., recapitalization and nationalization of banks as well as enormous fiscal spending — have socialist characteristics.

But what’s wrong about having socialist features or having socialism? The conservatives have labeled Barack Obama socialist. His plan to introduce universal health coverage in the US is socialistic. In fact, Hillary Clinton’s proposed health reforms are more radical than Obama’s program. That makes Hillary not only a feminist but a socialist, too. So what?

Schumpeter, who did not advocate socialism, nevertheless thought that socialism could not be avoided. In his address titled "The March into Socialism," Schumpeter said "the capitalist order tends to destroy itself and that centralist socialism is...a likely heir apparent."

Schumpeter gave three reasons for believing that capitalism is destroying itself and that socialism is the likely alternative. It is not capitalism’s failure but its successes that will lead to its demise.

• First, Schumpeter thought that technological progress and bureaucratic administration in modern capitalism eventually stifle entrepreneurship and innovation.

• Second, the advance of capitalism leads to the dominance of large corporations and the decimation of social strata such as small businessmen and farmers that are pillars of individual proprietorship. This weakens capitalism’s institutional scaffolding.

• Third, capitalist culture promotes rational and critical thinking, and this leads to the emergence of deep intellectuals who turn against the system.

To illustrate, the communist leaders in the Philippines, the Lavas and Jose Maria Sison, came from the elite and were products of the best schools.

Socialism, too, has its own version of creative destruction. Old socialism — the central command economy — has vanished except in a surreal place called North Korea. The "actually existing socialism" is a market economy. And it is in the socialist economies of developing countries where rapid growth has occurred — in China and in Vietnam. The social democrats likewise claim they are socialists. And surely, living in the Scandinavian countries is like living in heaven. Markets and competition, on the one hand, and socialism, on the other hand, can thus co-exist. In fact, they can complement each other.

As leaders put in place the new reforms to tackle the present and future economic global crises, we can expect a further convergence of so-called capitalism and so-called socialism.

As the unrepentant communist but "capitalist roader" Deng Xiao-Ping once said, it does not matter whether the cat is black or white so long as it catches mice.

Mr. Sta. Ana coordinates Action for Economic Reforms (www.aer.ph)

-------------------------------------------------------------------------------------------------
http://www.abc.net.au/insidebusiness/content/2007/s2420907.htm

Bush Pushes For Free Market

Inside Business

Transcript

Date : 16/11/2008


Reporter: Alan Kohler


ALAN KOHLER, PRESENTER: President Bush's big speech on Thursday in which he defended free market capitalism and small government sounded a bit like the ravings of the captain of the Titanic as he went down with the ship, blaming the iceberg.

No one's recommending a switch to socialism, just better capitalism, specifically better regulation of it. [REALLY?? ARE YOU SURE ABOUT THAT??] In fact, in the same speech President Bush talked about the need for more and better regulation of financial markets before contradicting himself by suggesting that the threat to economic prosperity comes not from too little government but too much government.

[DEAR MR. KOHLER. ARE YOU SAYING THAT EUROPEAN CAPITALISM IS BETTER CAPITALISM?? PERHAPS YOU REQUIRE A LESSON IN THE DISTINCTION BETWEEN ANGLO-AMERICAN CAPITALISM AND CONTINENTAL CAPITALISM, OR PERHAPS, YOU ALREADY KNOW AND YOUR STATEMENT IS NUANCED!! IT MORE THAN IMPLIES THAT, IN YOUR VIEW, IT IS TIME FOR THE UNITED STATES TO ADOPT EUROPE'S SOCIAL-MARKET REDISTRIBUTIONIST FORM OF CAPITALISM: a/k/a 'SOFT SOCIALISM'. DO YOU NOT RECALL THE FAMOUS U.S. SUPREME COURT DECISION THAT LONG AGO DEFINED THE PRESENCE OF 'OBSCENITY'?? IN Jacobellis v. Ohio, 378 U.S. 184, 197 (1964), JUSTICE POTTER STEWART EXPLAINED 'HARD CORE' PORNOGRAPHY OR 'OBSCENITY' IN THE FOLLOWING MANNER: "I SHALL NOT TODAY ATTEMPT FURTHER TO DEFINE THE KINDS OF MATERIAL I UNDERSTAND TO BE EMBRACED...BUT I KNOW IT WHEN I SEE IT..." AT LEAST ONE LONGTIME UNIVERSAL PROVERB PROVIDES A COMMON SENSE COROLLARY TO THIS: IF IT WALKS LIKE A DUCK AND QUACKS LIKE A DUCK, THEN IT IS A DUCK! OR, IN OTHER WORDS, WHY DON'T YOU JUST CALL A SPADE, A SPADE?]

The crisis was not a failure of the free market system, he declared.

Actually, I think you'll find it was, Mr President. The crisis is now greatest wherever the market was freest. Governments around the world are being forced reluctantly to nationalise their banking system in various ways, including Australia, where the Government has guaranteed bank deposits. And the G20 government leaders are meeting in Washington, the global HQ of regulatory failure, trying to agree on a fiscal rescue for the world economy and to restrain themselves from protectionism in their hour of emergency.

And then there's the car industry. As much a foundation of capitalism as the housing sector and the financiers to which they are both coupled, the US car industry, including its offshoots in Australia, is the author of its own misery, having failed to deal with their customers' changing energy needs. Instead of preparing for the future the car barons lobbied congress to be exempt from it. But the future arrived anyway, and they're now for the wrecker's yard. Kevin Rudd has coughed up $6.2 billion of taxpayers' money to support the car industry here, and in America, a debate is raging over whether to bailout Detroit to save millions of jobs. Another triumph for the free market.

------------------------------------------------------------------------------------------------

http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/11/15/national-post-editorial-page-the-worst-economic-system-except-for-all-the-others.aspx

The worst economic system … except for all the others

Canadian Post Editorial Page

Posted by Kelly McParland

November 15, 2008, 9:00 AM

Winston Churchill once told the British House of Commons that “democracy is the worst form of government except all those other forms that have been tried from time to time.” In the economic sphere, perhaps the same could be said about capitalism: It’s the worst way to order markets — except for all the other ways that have ever been tried.


We’re not talking about pure laissez-faire capitalism here. If that ever existed, it disappeared around the time of the trust busters and muckrakers of a century ago. Rather, we mean the basic concept that free markets are preferable to centrally planned economies.

There will always be a regulatory role for government preventing fraud and abuse, mitigating the peaks and valleys of the investment cycle, and settling contractual disputes, among others.

But in general, markets work best when consumers are free to spend their disposable income as they choose (and are left with as much disposable income as possible), when executives and entrepreneurs — not bureaucrats — make business decisions, and government is mostly left to play umpire.


Take Canada’s economy for instance. Three of its four largest economic expansions since the Second World War have occurred since the Canada-U.S. Free Trade Agreement and NAFTA were signed. Economic nationalism failed to produce the benefits its advocates envisioned. When bureaucrats and politicians tried to pick economic winners and losers, protect aging industries with direct grants, limit foreign investment and erect tariff barriers against imports to spark domestic production, our economy was flat (or at least flatter), and for longer periods, than during the period since free trade.


There can be no denying that free markets produce spikes and troughs, such as the trough the world’s financial markets are experiencing now. And each time one occurs, there are calls — as there will be this weekend from G20 leaders gathered in Washington. D.C. — for more international oversight by governments against future downturns. But, as history shows, government regulatory initiatives are just as likely to prolong hardship as they are to ameliorate it.


In a speech to the Manhattan Institute Thursday, U.S. President George Bush said “It’s true this crisis included failures — by lenders and borrowers and by financial firms and by governments and independent regulators. But the crisis was not a failure of the free-market system.” This is true, if ironic, coming from Mr. Bush. His administration’s initial $700-billion bailout package has done as much to deepen the current crisis as it has to solve it.


The idea that the government had to intervene to save the financial system was not in itself misguided. As others have noted, the financial markets are the equivalent of a basic utility: Their failure would mean the collapse of the entire economy. Amidst a credit freeze-up in which bankers had no idea who was hiding what radioactive assets on their balance sheets, lending ceased. Washington had little choice but to oil the gears with extra liquidity.


Unfortunately, the public servants controlling the $700-billion oil can had little idea where to direct the spout. Initially bureaucrat-driven, the Bush White House had to rework its stimulus plan this week to make it consumer-driven because financial regulators were doing preposterous things with the bailout money, such as using it to secure the credit of corporations and banks that were not in financial trouble.


Yet, even though Mr. Bush’s own cabinet has failed to live up to his faith in free-market capitalism, his words are nonetheless true. As he rightly pointed out, many European countries have lately experienced economic freefalls as large as the Americans despite being far more heavily regulated. Even Sarbanes-Oxley, the complex compliance regulations placed on U.S. business in the post-Enron era, failed to do anything to prevent or lessen the current woes.


Would any of us want to go back to the days of regulated airfares? The end of regulation in air travel has opened up flights and jet holidays to millions of Canadians who could never afford them when government set the price. The same is true of the cost of long-distance calling, cellphones and the rapid expansion of choice in cable television: The moment government ceased being the economic decision-maker, and turned over that task to the consumer, choice when up and price went down.


Canada and the world does not need a return to wage and price controls, rent controls, 6-and-5 inflation targets, foreign investment reviews or any of the other ways governments in the past 50 years have tried to smooth out the bull and bear cycles of the market.


If G20 leaders want to do something useful, they can look for ways to make markets work better, rather than trying to concoct ambitious news schemes to increase government presence in economic choices, something that almost always just makes matters worse.


National Post

------------------------------------------------------------------------------------------------

http://euobserver.com/9/27114/?rk=1

US laissez-faire to battle European 'social market' at G20


LEIGH PHILLIPS

EUObserver.com

14.11.2008 @ 17:31 CET

EUOBSERVER / BRUSSELS - Ahead of the G20 meeting of the world's leading industrialised and emerging economies this weekend, the president of the United States and the president of the European Commission have laid down their markers for what should be the solutions to save the global economy.

On Thursday, US President George W. Bush made an impassioned plea for laissez-faire capitalism and warned against turning away from free markets, while commission President Jose Manuel Barroso extolled the virtues of public intervention and the European welfare state model built at the end of World War Two.

The European 'social market' model has been celebrated by President Barroso (Photo: wikipedia)

"In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed and exploitation and failure," said the US leader in a speech on Friday (14 November) at the Federal Hall National Memorial.

He conceded that there had been failures, but the blame for these should be pinned on borrowers, financial firms and regulators, not capitalism.

"But the crisis was not a failure of the free market system," he said.

"And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people all across the globe."

Mr Barroso, himself a conservative, [IS THIS A JOKE?? A 'CONSERVATIVE' WHAT??] said that the US has had to catch up with the European lead on all major global issues [??] and now the US is behind on what is necessary to fix the world economy.

[DEAR MR. BARROSO, YOU SEEM TO MISUNDERSTAND. THE UNITED STATES DOES NOT WISH TO DRIVE ITSELF OFF THE ECONOMIC AND TECHNOLOGICAL CLIFF, AS DOES EUROPE. YES, WE HAVE PROBLEMS WITH THE LAISSEZ FAIRE FORM OF CAPITALISM THAT HAS SERVED OUR NATION EXTREMELY WELL SINCE ITS BIRTH. BUT, OUR SYSTEM, UNLIKE THE BUREAUCRATIZED EUROPEAN 'SOCIAL-MARKET' CAPITALIST SYSTEM, IS FLEXIBLE ENOUGH TO APPEAL TO, INSPIRE & BENEFIT ALL CITIZENS WILLING TO WORK AND TAKE ADVANTAGE OF OPPORTUNITIES. BY CONTRAST, EUROPE'S ELITIST RENT-SEEKING 'SOFT' SOCIALISM WORKS FOR THE BENEFIT OF ONLY THOSE IN POSITIONS OF 'AUTHORITY' - THE 'INTELLECTUALS'.]

"When our American friends now are ready to embrace a real commitment to fight climate change, this is exactly what we are been saying and promoting for some time. When our American partners are saying they want to engage more in a multilateral world, this is exactly what the EU has been saying and promoting for some time. When our American partners now are saying they should put some rules in a financially unpredictable, sometimes unregulated market, this is exactly what the EU has been supporting for some time," he told a European Network of Foundations conference on democracy promotion in Brussels today.

"When our American friends now are saying that they should find some ways of promoting some public tools, some public systems, in terms of social security, public education, this is exactly what we Europeans have been doing at least since the end of the Second World War, with the development of our social market economy," he said.

[MR. BARROSO EXTOLS THE VIRTUES OF THE EUROPEAN 'WELFARE STATE'.]

Global governance

European political parties, businesses, and NGOs too have all laid out what they hope to see agreed to.

The national chambers of commerce from each of the G20 countries issued a joint declaration calling on world leaders to agree to strengthened national and international supervisory structures and improve the quality of regulatory standards, but warned governments against raising tariffs and protectionism.

"The World Trade Organisation should be taken as a positive example of global governance," the 20 chambers said in a statement.

Meanwhile, the Socialist grouping in the European Parliament on Thursday issued a five-point plan from Manchester where their MEPs had been having a strategising pow-wow, for a rebuilding of the world financial system and how to boost the economy.

Their "Manchester Declaration", is a largely Keynesian document, calling for a European green investment package to put money in people's pockets and make the shift to a low-carbon economy, targetting in particular vulnerable households and small businesses.

The left-of-centre MEPs call for much greater levels of intergovernmental co-ordination and public spending.

"The European Union has a key role to play in raising and channelling funds. There should be no taboo," said French Socialist MEP Pervenche Berès, chair of the European Parliament's economic and monetary affairs committee. "The member states should discuss the possibility of the EU issuing Eurobonds to invest in European projects."

Priming the global pump

UK premier Gordon Brown, who is likely to play a prominent role in the G20 discusions, having been the architect of the bail-out packages adopted in part or in whole by other EU capitals that saved their banks from a complete credit crunch.

However, despite his also being a member of the Socialist political family, he is expected at the summit to emphasise the need for co-ordinated global tax cuts to prime the global economic pump, although he also supports government spending increases.

"We need to agree on the importance of co-ordination of monetary and fiscal policy," he said before heading to Washington.

"There is a need for urgency. By acting now, we can stimulate growth in all our economies. The cost of inaction will be far greater than the cost of any action."

The Labour prime minister has also repeatedly warned against new "over-regulation" in response to the crisis. Nevertheless, Mr Brown is also pushing for international oversight of the world's top 30 banks by a college of supervisors.

In a curious twist of fate, French President Sarkozy, who, being of the conservative UMP party, has been perhaps the most dirigiste of EU leaders in the solutions he has embraced both at the European level and what he hopes to see the G20 endorse.

Mr Sarkozy, who currently chairs the EU's six-month rotating presidency, will argue for the development of cross-border regulation of financial institution lending practices and investment decisions.

On Thursday he also used the opportunity of the lead-up to the summit to deliver an obituary for the US dollar as a world currency.

"I am leaving tomorrow for Washington to explain that the dollar - which after the Second World War under Bretton Woods was the only currency in the world - can no longer claim to be the only currency in the world. What was true in 1945 cannot be true today," he said.

While Germany put up one of the main blocks to French plans for the development of a common European stimulus package at a summit of EU leaders last week, Chancellor Angela Merkel supports Mr Sarkozy's wish to see regulation of hedge funds and an end to excessive remuneration for bank executives.

However, despite their differences, the EU leaders head to Washington united on a plan of action they are to take to the meeting that would see greater transparency of financial transactions through revised accounting standards, the construction of an early warning system to tackle risks and a central role for the International Monetary Fund (IMF) "in a more efficient financial architecture."

Many aspects of the European plan are likely to meet resistance from President Bush, who remains unconvinced that deregulation of financial markets had any role to play in the crash.

Thus while Brussels is impatient that action be taken urgently to deal with the crisis, in many ways does not expect much from this first summit, and the French EU presidency has called for a second G20 summit to be held next February in order to involve the Democractic president-elect, Barack Obama, who will only send former Clinton Administration secretary of state Madeleine Albright and and former Iowa Congressman Jim Leach to the Washington meeting.

G20 undemocratic, say NGOs

Development NGOs nevertheless believe that the transatlantic differences are largely superficial, as all G20 leaders, from centre-left to centre-right, have long been convinced of the need for ever greater market liberalisation, if not all to the same degree.

[OF COURSE THEY DO!! IF AMERICANS BUY-INTO THIS NONSENSE, THEN BOTH EUROPE & THE UNITED STATES WILL BE PASSENGERS IN THE SAME HOLE-RIDDEN BOAT - A MODERN DAY ECONOMIC & POLITICAL TITANIC NAMED THE S.S. SOCIALISTA! THIS IS WHAT THE OVER-REGULATION & TAXATION-BESEIGED INDUSTRIES IN EUROPE HAVE LONG LOBBIED FOR - A 'LEVELING OF THE GLOBAL ECONOMIC PLAYING FIELD'. AND, NOW, MANY U.S. MULTINATIONAL COMPANIES THAT SUFFER FROM 'POLITICAL & REGULATORY FATIGUE' AS THE RESULT OF ONGOING TRANSATLANTIC TENSIONS AND THE 2008 U.S. PRESIDENTIAL ELECTION RESULT, ARE FINALLY 'CRYING UNCLE' AND GIVING INTO EUROPE'S LEGALISTIC 'FULL COURT PRESS', WITHOUT REGARD OF THE NEGATIVE IMPACTS FOR THE MILLIONS OF SMALL & MEDIUM-SIZED BUSINESSES ON BOTH SIDES OF THE ATLANTIC, WHICH WILL BE SWEPT UP IN THIS SOCIALIST TSUNAMI!!]

A coalition of 630 civil society organisations has criticised the meeting as undemocratic as 170 countries have not been invited even though the decisions reached by the G20 affect everyone.

The groups are demanding that future global summits involved all goverments and that the United Nations be the convener, not the United States. They also want to see the engagement of citizens' groups and social movements and full transparency during all discussions.

They are particularly worried about giving the World Bank and the International Monetary Fund new powers.


"The policies of northern governments, the World Bank and the International Monetary Fund pursued for the past thirty years have failed spectacularly," said Vitalis Meja with Afrodad.

"And now, the response is to bring 20 governments to DC for a new ‘Washington Consensus'."

Friends of the Earth and the Jubilee Debt campaign criticised the positions of all the leaders heading into the summit.

"While those that created the crisis have been bailed out (bonus intact) with unprecedented sums of taxpayer money, the poor in developed and developing nations have received nothing," they said in a statement.

"Let's call time on global greed," they continued. "The same systems that create poverty here – unfair trade rules and tax systems, debt burdens, privatisation and attacks on welfare spending – also create poverty in the developing world."

© 2008 EUobserver.com. All rights reserved.

------------------------------------------------------------------------------------------------

http://www.socialistgroup.org/gpes/newsdetail.do?lg=en&id=103648&href=home

THE SOCIALIST GROUP IN THE EUROPEAN PARLIAMENT

Socialists set out five-point plan to beat recession. Said Socialist Group leader Martin Schulz today: ”We support the call for a new Bretton Woods to create a new, more accountable, more stable and fairer system of global financial governance.

13/11/2008 - Socialists set out five-point plan to beat recession.

In response to the official recognition of recession in the EU today, Socialist Euro MPs today set out a five-point plan to rebuild the world financial system and boost the economy.

The Group, which has been holding talks in Manchester, UK, this week, issued a three-page Manchester Declaration on the financial crisis.

The declaration, published after discussions by video-conference with EU Commissioner Joaquim Almunia, sets out a five-point action plan for the EU. It builds on a policy position adopted last week by prime ministers and party leaders of the Party of European Socialists, led by former Danish premier Poul Nyrup Rasmussen.

Said Socialist Group leader Martin Schulz today:”We support the call for a new Bretton Woods to create a new, more accountable, more stable and fairer system of global financial governance.

“We face the deepest economic crisis in 80 years with dramatic job losses. In addition, more than 150 million jobs may disappear next year throughout the developing world, as a result of the rich world’s credit crunch. Governments have saved the banks with public money but it is now pay-back time.”

Said Pervenche Berès, chairwoman of the European Parliament’s economic and monetary affairs committee: “Only strong, coordinated government action both at European and international level can restore confidence, secure and create more jobs, fill order books, and boost demand from both business and consumers. The more coordinated such actions are, the more effective they will be.

“The European Union has a key role to play in raising and channelling funds. There should be no taboo. The member states should discuss the possibility for the EU to issue Eurobonds to invest in European projects.”

The Socialist Group called on its member parties across the 27-nation EU to take on board the substance of the Manchester Declaration.

Calling for strong European and international coordination, the Declaration urges:

• Targeting measures to help on those who need it most and in particular small firms and vulnerable households. This will involve rapidly restoring levels of lending to households and businesses, especially SMEs
  

[THIS SOUNDS VERY SIMILAR TO OBAMA'S 'SPREADING THE WEALTH' DOCTRINE!!]

• A European ban on mega-bonuses and golden parachutes;
  

[OUTSIDE THE CONTEXT OF ANY GOVERNMENTAL 'BAILOUT' OF PRIVATE COMPANIES AS A RESULT OF OR INCIDENT TO THE GLOBAL FINANCIAL CRISIS, THIS REFLECTS AN INTRUSION OF GOVERNMENT INTO CORPORATE GOVERNANCE AFFAIRS, AND THE PRIVATE RIGHT TO FREEDOM OF CONTRACT].

• Refusal of compulsory redundancies [??]
  
  
• Implementation of a European Green Investment package to boost the economy, avoid a long-lasting recession and help Europe to meets its climate and energy goals

• Revival of the Doha world trade talks to reach successful, development-friendly conclusions.

[THIS SOUNDS VERY SIMILAR TO THE UNITED NATIONS & U.S. DEMOCRATIC PARTY'S 'NEW GREEN DEAL' AND TO OBAMA'S PLEDGE OF PROVIDING "5 MILLION NEW GREEN JOBS"!!]

Solange Hélin Villes solange.helin@europarl.europa.eu+ 32 2 283 21 47 + 32 476 51 01 72 http://www.socialistgroup.eu/

------------------------------------------------------------------------------------------------

http://www.whitehouse.gov/news/releases/2008/11/20081113-4.html

President Bush Discusses Financial Markets and World Economy

Federal Hall National Memorial

New York, New York

November 13, 2008

THE PRESIDENT: Thank you very much. Please be seated. Thank you. Larry, thank you for the introduction. Thank you for giving Laura and me a chance to come to this historic hall to talk about a big issue facing the world. And today I appreciate you giving me a chance to come and for me to outline the steps that America and our partners are taking and are going to take to overcome this financial crisis.

And I thank the Manhattan Institute for all you have done. I appreciate the fact that I am here in a fabulous city to give this speech. (Applause.) People say, are you confident about our future? And the answer is, absolutely. And it's easy to be confident when you're a city like New York City. After all, there's an unbelievable spirit in this city. This is a city whose skyline has offered immigrants their first glimpse of freedom. This is a city where people rallied when that freedom came under attack. This is a city whose capital markets have attracted investments from around the world and financed the dreams of entrepreneurs all across America. This is a city that has been and will always be the financial capital of the world. (Applause.)

And I am grateful to be in the presence of two men who serve ably and nobly New York City -- Mayor Koch and Mayor Giuliani. Thank you all for coming. Glad you're here. (Applause.) I thank the Manhattan Institute Board of Trustees and its Chairman Paul Singer for doing good work, being a good policy center. (Applause.) And before I begin, I must say, I would hope that Ray Kelly would tell New York's finest how much I appreciate the incredible hospitality that we are always shown here in New York City. You're the head of a fabulous police force, and we thank you very much, sir. (Applause.)

We live in a world in which our economies are interconnected. Prosperity and progress have reached farther than any time in our history. Unfortunately, as we have seen in recent months, financial turmoil anywhere in the world affects economies everywhere in the world. And so this weekend I'm going to host a Summit on Financial Markets and the World Economy with leaders from developed and developing nations that account for nearly 90 percent of the world economy. Leaders of the World Bank, the International Monetary Fund, the United Nations, and the Financial Stability Forum are going to be there, as well. We'll have dinner at the White House tomorrow night, and we'll meet most of the day on Saturday.

The leaders attending this weekend's meeting agree on a clear purpose -- to address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future. We also agree that this undertaking is too large to be accomplished in a single session. The issues are too complex, the problem is too significant to try to solve, or to come up with reasonable recommendations in just one meeting. So this summit will be the first of a series of meetings.

It will focus on five key objectives: understanding the causes of the global crisis, reviewing the effectiveness of our responses thus far, developing principles for reforming our financial and regulatory systems, launching a specific action plan to implement those principles, and reaffirming our conviction that free market principles offer the surest path to lasting prosperity. (Applause.)

First, we're working toward a common understanding of the causes behind the global crisis. Different countries will naturally bring different perspectives, but there are some points on which we can all agree:

Over the past decade, the world experienced a period of strong economic growth. Nations accumulated huge amounts of savings, and looked for safe places to invest them. Because of our attractive political, legal, and entrepreneurial climates, the United States and other developed nations received a large share of that money.

The massive inflow of foreign capital, combined with low interest rates, produced a period of easy credit. And that easy credit especially affected the housing market. Flush with cash, many lenders issued mortgages and many borrowers could not afford them. Financial institutions then purchased these loans, packaged them together, and converted them into complex securities designed to yield large returns. These securities were then purchased by investors and financial institutions in the United States and Europe and elsewhere -- often with little analysis of their true underlying value.

The financial crisis was ignited when booming housing markets began to decline. As home values dropped, many borrowers defaulted on their mortgages, and institutions holding securities backed by those mortgages suffered serious losses. Because of outdated regulatory structures and poor risk management practices, many financial institutions in America and Europe were too highly leveraged. When capital ran short, many faced severe financial jeopardy. This led to high-profile failures of financial institutions in America and Europe, led to contractions and widespread anxiety -- all of which contributed to sharp declines in the equity markets.

These developments have placed a heavy burden on hardworking people around the world. Stock market drops have eroded the value of retirement accounts and pension funds. The tightening of credit has made it harder for families to borrow money for cars or home improvements or education of the children. Businesses have found it harder to get loans to expand their operations and create jobs. Many nations have suffered job losses, and have serious concerns about the worsening economy. Developing nations have been hit hard as nervous investors have withdrawn their capital.

We are faced with the prospect of a global meltdown. And so we've responded with bold measures. I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown. At Saturday's summit, we're going to review the effectiveness of our actions.

Here in the United States, we have taken unprecedented steps to boost liquidity, recapitalize financial institutions, guarantee most new debt issued by insured banks, and prevent the disorderly collapse of large, interconnected enterprises. These were historic actions taken necessary to make -- necessary so that the economy would not melt down and affect millions of our fellow citizens.

In Europe, governments are also purchasing equity in banks and providing government guarantees for loans. In Asia, nations like China and Japan and South Korea have lowered interest rates and have launched significant economic stimulus plans. In the Middle East, nations like Kuwait and the UAE have guaranteed deposits and opened up new government lending to banks.

In addition, nations around the world have taken unprecedented joint measures. Last month, a number of central banks carried out a coordinated interest rate cut. The Federal Reserve is extending needed liquidity to central banks around the world. The IMF and World Bank are working to ensure that developing nations can weather this crisis.

This crisis did not develop overnight, and it's not going to be solved overnight. But our actions are having an impact. Credit markets are beginning to thaw. Businesses are gaining access to essential short-term financing. A measure of stability is returning to financial systems here at home and around the world. It's going to require more time for these improvements to fully take hold, and there's going to be difficult days ahead. But the United States and our partner are taking the right steps to get through this crisis.

In addition to addressing the current crisis, we will also need to make broader reforms to strengthen the global economy over the long term. This weekend, leaders will establish principles for adapting our financial systems to the realities of the 21st century marketplace. We will discuss specific actions we can take to implement these principles. We will direct our finance ministers to work with other experts and report back to us with detailed recommendations on further reasonable actions.

One vital principle of reform is that our nations must make our financial markets more transparent. For example, we should consider improving accounting rules for securities, so that investors around the world can understand the true value of the assets they purchase.

Secondly, we must ensure that markets, firms, and financial products are properly regulated. For example, credit default swaps -- financial products that insure against potential losses -- should be processed through centralized clearinghouses instead of through unregulated, "over the counter" markets. By bringing greater stability to this large and important financial sector, we reduce the risk to our overall financial systems.

Third, we must enhance the integrity of our financial markets. For example, authorities in every nation should take a fresh look at the rules governing market manipulation and fraud -- and ensure that investors are properly protected.

Fourth, we must strengthen cooperation among the world's financial authorities. For example, leading nations should better coordinate national laws and regulations. We should also reform international financial institutions such as the IMF and the World Bank, which are based largely on the economic order of 1944. To better reflect the realities of today's global economy, both the IMF and World Bank should modernize their governance structures. They should consider extending greater voter -- voting power to dynamic developing nations, especially as they increase their contributions to these institutions. They should consider ways to streamline their executive boards, and make them more representative.

In addition to these important -- to these management changes, we should move forward with other reforms to make the IMF and World Bank more transparent, accountable, and effective. For example, the IMF should agree to work more closely with member countries to ensure that their exchange rate policies are market-oriented and fair. And the World Bank should ensure its development programs reflect the priorities of the people they are designed to serve -- and focus on measurable results.

All these steps require decisive actions from governments around the world. At the same time, we must recognize that government intervention is not a cure-all. For example, some blame the crisis on insufficient regulation of the American mortgage market. But many European countries had much more extensive regulations, and still experienced problems almost identical to our own.

History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market. (Applause.)

We saw this in the case of Fannie Mae and Freddie Mac. Because these firms were chartered by the United States Congress, many believed they were backed by the full faith and credit of the United States government. Investors put huge amounts of money into Fannie and Freddie, which they used to build up irresponsibly large portfolios of mortgage-backed securities. And when the housing market declined, these securities, of course, plummeted in value. It took a taxpayer-funded rescue to keep Fannie and Freddie from collapsing in a way that would have devastated the global financial system. And there is a clear lesson: Our aim should not be more government -- it should be smarter government.

All this leads to the most important principle that should guide our work: While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people. (Applause.)

This is a decisive moment for the global economy. In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed and exploitation and failure. It's true this crisis included failures -- by lenders and borrowers and by financial firms and by governments and independent regulators. But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people all across the globe.

Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell products they want, and the dignity that comes with profiting from their talent and hard work. The free market system provides the incentives that lead to prosperity -- the incentive to work, to innovate, to save, to invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.

Free market capitalism is far more than economic theory. It is the engine of social mobility -- the highway to the American Dream. It's what makes it possible for a husband and wife to start their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and to build a better career. It is what allowed entrepreneurs in Silicon Valley to change the way the world sells products and searches for information. It's what transformed America from a rugged frontier to the greatest economic power in history -- a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the iPod.

Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems. Free markets allowed Japan, an island with few natural resources, to recover from war and grow into the world's second-largest economy. Free markets allowed South Korea to make itself into one of the most technologically advanced societies in the world. Free markets turned small areas like Singapore and Hong Kong and Taiwan into global economic players. Today, the success of the world's largest economies comes from their embrace of free markets.

Meanwhile, nations that have pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall. Cuba, once known for its vast fields of cane, is now forced to ration sugar. And while Iran sits atop giant oil reserves, its people cannot put enough gasoline in its -- in their cars.

The record is unmistakable: If you seek economic growth, if you seek opportunity, if you seek social justice and human dignity, the free market system is the way to go. (Applause.) And it would be a terrible mistake to allow a few months of crisis to undermine 60 years of success.

Just as important as maintaining free markets within countries is maintaining the free movement of goods and services between countries. When nations open their markets to trade and investment, their businesses and farmers and workers find new buyers for their products. Consumers benefit from more choices and better prices. Entrepreneurs can get their ideas off the ground with funding from anywhere in the world. Thanks in large part to open markets, the volume of global trade today is nearly 30 times greater than it was six decades ago -- and some of the most dramatic gains have come in the developing world.

As President, I have seen the transformative power of trade up close. I've been to a Caterpillar factory in East Peoria, Illinois, where thousands of good-paying American jobs are supported by exports. I've walked the grounds of a trade fair in Ghana, where I met women who support their families by exporting handmade dresses and jewelry. I've spoken with a farmer in Guatemala who decided to grow high-value crops he could sell overseas -- and helped create more than 1,000 jobs.

Stories like these show why it is so important to keep markets open to trade and investment. This openness is especially urgent during times of economic strain. Shortly after the stock market crash in 1929, Congress passed the Smoot-Hawley tariff -- a protectionist measure designed to wall off America's economy from global competition. The result was not economic security. It was economic ruin. And leaders around the world must keep this example in mind, and reject the temptation of protectionism. (Applause.)

There are clear-cut ways for nations to demonstrate the commitment to open markets. The United States Congress has an immediate opportunity by approving free trade agreements with Colombia, Peru*, and South Korea. America and other wealthy nations must also ensure this crisis does not become an excuse to reverse our engagement with the developing world. And developing nations should continue policies that foster enterprise and investment. As well, all nations should pledge to conclude a framework this year that leads to a successful Doha agreement.

We're facing this challenge together and we're going to get through it together. The United States is determined to show the way back to economic growth and prosperity. I know some may question whether America's leadership in the global economy will continue. The world can be confident that it will, because our markets are flexible and we can rebound from setbacks. We saw that resilience in the 1940s, when America pulled itself out of Depression, marshaled a powerful army, and helped save the world from tyranny. We saw that resilience in the 1980s, when Americans overcame gas lines, turned stagflation into strong economic growth, and won the Cold War. We saw that resilience after September the 11th, 2001, when our nation recovered from a brutal attack, revitalized our shaken economy, and rallied the forces of freedom in the great ideological struggle of the 21st century.

The world will see the resilience of America once again. We will work with our partners to correct the problems in the global financial system. We will rebuild our economic strength. And we will continue to lead the world toward prosperity and peace.

Thanks for coming and God bless. (Applause.)

------------------------------------------------------------------------------------------------

http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/11/14/207904.aspx

Can Bush and Flaherty save capitalism?

By Peter Foster

Canadian National Post

Posted: November 13, 2008, 9:19 PM by NP Editor

Antidote to Father d’Escoto’s ‘liberation theology’ at the UN

It is encouraging that at least two key participants in this weekend’s G20 meetings in Washington have come out in favour of battered capitalism. Yesterday, both President George W. Bush and Canadian Finance Minister Jim Flaherty declared that the current crisis did not represent a failure of markets.


In a speech in New York, Mr. Bush even delivered a much needed paean for the easily forgotten achievements of economic freedom. Mr. Bush’s address to the Manhattan Institute might be dubbed “the speech John McCain never gave, but should have, and that Barack Obama never will.” He referred pointedly to the voices both from the left and right who were equating the crisis with “greed and exploitation.” They were, he suggested, very wrong.The Dow, as if picking up the president’s positive message, gained almost 1,000 points in the wake of the speech. That obviously wasn’t the only reason for the rally, but there’s no doubt that the market welcomes some respite from six months of relentless Wall Street and capitalism bashing.


Typical of anti-capitalist humbug were the noises emerging this week from a UN meeting on inter-faith tolerance promoted by one of the most religiously intolerant regimes on earth, Saudi Arabia.



One of its masterminds was the recently elected head of the UN General Assembly, Miguel d’Escoto Brockmann, a former Sandinista government official and perpetual proponent of rabid, anti-Western “liberation theology.” Señor d’Escoto kicked off the conference with towering condemnation of the West’s “unbridled greed.”



“It is a time of numerous bankruptcies,” declared Father d’Escoto, “but the worst is the moral bankruptcy of humankind’s self-proclaimed ‘more advanced societies,’ which has spread throughout the world. It is not only Wall Street that needs to be bailed out. We need to bail out all of humankind from its social insensitivity.”



Father d’Escoto’s social sensitivity is more than adequately attested to by the fact he is a past recipient of the Lenin Peace Prize (previously the Stalin Peace Prize). When he was elected head of the General Assembly, he declared, “I do not want to turn this presidency into a place to take it out on the United States.” But then since he had described Ronald Reagan as the “butcher of my people,” U.S. representatives were a little cynical of such professed even-handedness.



Father d’Escoto has called for a more democratic UN, although we have to remember that his idea of democracy is of the one-way variety embraced by the former Sandinistas.



The red cleric, it should be noted, appointed Maude Barlow as the UN’s special envoy for water. Upon her appointment, Ms. Barlow told the Wall Street Journal: “I don’t think I would have been offered a role there by anyone but someone like Father Miguel. He cares deeply about the poor.”



But not deeply enough, it seems, to reflect on why socialism has proved so disastrous for them. Mr. Bush’s speech yesterday was a welcome antidote to such drivel.



Although no Senator Obama — the new gold standard (if that’s not an oxymoronic term) for political rhetoric — Mr. Bush elicited enthusiastic applause several times when referring to the resilience and financial status of New York, and to how free market capitalism was “more than an economic theory.” It had been, he said, “the highway to the American dream.” It had produced the steamboat and the airplane, the computer and the CAT scan, the Internet and the iPod. It had worked wonders in other economies, from Japan and South Korea, through Singapore, Hong Kong and Taiwan. The United States, he also pointed out, had bounced back many times before; in the 1940s, in the 1980s — at the end of which it had won the Cold War — and after 9/11.



The President also delivered one very clear warning to his successor that a key policy response to the 1929 stock market crash had been the introduction of the disastrous Smoot-Hawley tariff, which had been designed to protect jobs but had served only to lengthen breadlines by destroying trade.



Mr. Bush’s speech was more directly aimed at the world leaders he will be meeting over dinner tonight at the White House, and on Saturday, to discuss the financial crisis. He is obviously keen to ward off the assault of dirigistes such as French President Nicolas Sarkozy. Mr. Bush declared that G20 participants should reaffirm that “free-market principles offer the surest path to lasting prosperity.”


In a piece in the Financial Times (which you can also read on our site) meanwhile, Mr. Flaherty too had rare kind words for the invisible hand, downplayed grand global financial architectural plans and suggested that reform — like charity — should begin at home. “The open market system did not fail in this crisis,” he said.



When it comes to regulation, it seems, we have myriad examples of what doesn’t work, but in terms of bringing people out of poverty, in promoting innovation and even, as Mr. Bush suggested, “social justice,” there is no substitute for capitalism. It was inspiring to hear the President reaffirm that fact, and point out that the perpetual danger is not from too little government, but from too much, especially of the kind promoted down at Turtle Bay.


Financial Post

------------------------------------------------------------------------------------------------

http://www.msnbc.msn.com/id/27698354

Bush makes case for the free markets

Speech in advance of economic summit defends American capitalism


The Associated Press


updated 2:40 p.m. ET, Thurs., Nov. 13, 2008


NEW YORK - President George W. Bush asserted Thursday that the global financial crisis is “not a failure of the free market” and urged world leaders to adopt modest financial reforms that stop short of the tighter regulations Europeans favor.


“Our aim should not be more government. It should be smarter government,” Bush said during a speech in New York, a day before about two dozen world leaders converge on Washington for a weekend summit he is hosting.


Bush called on the leaders to embrace “reasonable” reforms, saying changes won’t work if they shun the free market system or restrict trade.


The president delivered a vigorous defense of free-market capitalism and easier global trade to frame his approach to the high-level gathering. Bush invited representatives of some of the world’s biggest industrial democracies, emerging nations and international bodies to Washington to start developing a more coordinated world response to the economic woes that have millions of people struggling to keep their jobs, their homes and their hopes.


With the severe economic downturn threatening to end Bush’s tenure on a sour note before President-elect Barack Obama takes over, he will host the leaders at a White House dinner Friday and review causes and solutions for the financial mess Saturday.



It was fitting that Bush’s argument against regulatory overreach was delivered not in Washington but from the heart of Wall Street. He spoke at venerable Federal Hall, which was home to the first Congress and is within shouting distance of New York Stock Exchange.


Bush called for reforms to strengthen the global economy long-term and said leaders at this weekend’s meeting would “discuss specific actions we can take.”


Among the areas for possible agreement, Bush listed:


 Bolstering accounting rules for stocks, bonds and other investments so investors have a clearer sense of the true value of what they buy.


 Requiring “credit default swaps” — a type of corporate debt insurance — to be processed through a central clearinghouse. That would help provide crucial information on the parties involved in these complex, unregulated products. Prices for this insurance soared in the aftermath of the Lehman Brothers’ bankruptcy and imperiled American International Group, a major insurer of this kind of corporate debt.


 Taking a fresh look at rules aimed at preventing fraud and manipulation in trading of stocks and other securities.


 Better coordinating financial regulations among countries.


 Giving a wider variety of countries voting power at the International Monetary Fund and the World Bank.


Notably absent from his speech was any talk about what the U.S. might do to bail out the troubled auto industry or the debate over a second U.S. stimulus package.


“The crisis was not a failure of the free market system,” Bush said. “And the answer is not to try to reinvent that system.”


But Bush’s argument that “government intervention is not a cure-all” came as some critics think his administration already is overstepping in private markets. The federal dollars being spent or put on the line to rebuild the nation’s financial system could easily run into the trillions. Already the Bush administration has enacted a $700 financial rescue package, backed the purchase of investment bank Bear Stearns, bought stock in leading banks, engineered a government takeover of mortgage giants Fannie Mae and Freddie Mac, guaranteed money market fund holdings and funneled billions to stabilize troubled insurance giant American International Group.


“I’m a market-oriented guy, but not when I’m faced with the prospect of a global meltdown,” Bush said.


At the same time, the president aggressively defended the U.S. against charges from around the world that insufficient U.S. regulation led to the credit collapse worldwide.


This was his way of pushing back against both the criticism and the calls by allies for more intrusive rules. Heading into the meeting, Europeans are seen as looking more urgently for broad changes and tighter universal banking regulations than is the United States.


“Many European countries had much more extensive regulations and still experienced problems almost identical to our own,” Bush said.


Some critics have said that lax oversight by U.S. and other regulators failed to detect problems and respond with action that could have prevented the meltdown. The crisis began with the collapse of the U.S. housing market, which froze credit, then shook the broader financial sector and finally rippled overseas.


“History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market,” he said. “It would a terrible mistake to allow a few months of crisis to undermine 60 years of success.”


Dan Price, Bush’s deputy national security adviser for international economic affairs, rejected suggestions of discord with other nations and said it was “grossly inaccurate” to suggest the U.S. was not taking a firm lead in reform.


“We are no less committed to fixing the problems, and addressing regulatory and other deficiencies, than any other leader,” he said.


While in New York, the president addressed a conference at the United Nations on religious tolerance and met privately with King Abdullah of Saudi Arabia.


The summit is just the first in a series intended to deal with the enormity of the economic meltdown, and the next meeting won’t be until after Bush leaves office on Jan. 20.


In the United States alone, the nation’s jobless ranks zoomed past 10 million last month, the most in a quarter-century, as 240,000 more people lost jobs. In the latest dire sign, American automakers say they are struggling to survive.


Obama is steering clear of the summit but will have a couple representatives available to meet with leaders on his behalf.


Besides the United States, the countries represented will be Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. Those countries and the European Union make up the so-called G-20.


Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

-------------------------------------------------------------------------------------------------

http://news.yahoo.com/s/ap/20081113/ap_on_go_pr_wh/meltdown_bush;_ylt=AjrVdiPB3rfRfgvsj0x2a34Gw_IE

Bush defends capitalism on eve of economic summit

By BEN FELLER


Associated Press

November 13, 2008


NEW YORK – President George W. Bush fervently defended U.S.-style free enterprise Thursday as the cure for the world's financial chaos, not the cause. He warned foreign leaders ahead of a weekend summit not to crush global growth with restrictive new rules.


"We must recognize that government intervention is not a cure-all," Bush said from Wall Street, setting his own tone for the two-day meeting that begins Friday in Washington seeking solutions to the economic crisis that has spread around the world. "Our aim should not be more government. It should be smarter government."


The president acknowledged that governments share the blame for the severe economic troubles that have hit banks, homes and whole countries.


He spelled out his prescription, which includes tougher accounting rules and more modern international financial institutions. But he stopped short of the tighter oversight and regulation that European leaders want. All his ideas came with a warning: Don't disturb capitalism.


"In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed, exploitation and failure," Bush said.


"It is true that this crisis included failures, by leaders and borrowers, by financial firms, by governments and independent regulators," Bush said. "But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system."


That warning about the dangers of too much government intervention came not long after he championed the biggest bailout in U.S. history: a $700 billion taxpayer-funded plan to rescue the financial industry. His government has also signed off on costly rescues for housing, insurance and other financial institutions.


The U.S. wields enormous clout in any global response to the economic crisis, and Bush is host for the weekend gathering, bringing together heads of state from the world's biggest economies as well as emerging nations. It is intended to be the first in a series.


But Bush's personal influence is waning.


In about two months, Democrat Barack Obama will take over as president. Though the president-elect does not plan to attend this summit, he has authorized former Iowa Rep. Jim Leach and former Secretary of State Madeleine Albright to represent him. Obama's transition team says they will primarily be listeners on the periphery of the meetings.


The world leaders come to Washington with their own ideas for change. French President Nicolas Sarkozy, British Prime Minister Gordon Brown and others are advocating a broader overhaul of financial regulations than Bush wants. The Europeans also want a pledge for concrete changes in just 100 days.


The stated goal for this weekend is to examine the causes of the crisis and begin mapping out principles for a response.


But Britain's Brown, on his way to the summit, declared, "There is a need for urgency."

It was fitting that Bush's argument against regulatory overreach was delivered not in Washington but on Wall Street. His speech venue was venerable Federal Hall, home to the first Congress and within shouting distance of the New York Stock Exchange.


There was freshly sobering news on the U.S. economy: The number of newly laid-off people seeking unemployment benefits jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks. Still the Dow Jones industrial average surged 553 points at the end of the trading day.


Some of Bush's admonitions raised questions about his own past actions, including last month's big bailout law.


Also, he is one of those voices from the right who railed about greed, saying in an unguarded moment in July that Wall Street "got drunk and now it's got a hangover."


On Thursday, he defended his administration against charges from some leaders that insufficient oversight and regulation in the U.S. contributed to — even caused — the mess by failing to raise alarms. Obama is among those who say no one was minding the people's business as the housing market plunged, credit markets ground to a halt and the broader financial system went into distress.


White House aides play down Bush's differences with other nations, saying the leaders have much in common, as evidenced by the gathering itself.


Bush's list of possible areas for agreement include:

• Bolstering accounting rules for stocks, bonds and other investments so investors have a clearer sense of the true value of what they buy.
  
  
• Requiring "credit default swaps" — a type of corporate debt insurance — to be processed through a central clearinghouse. That would help provide crucial information on the parties involved in these complex, unregulated products.
  

• Taking a fresh look at rules aimed at preventing fraud and manipulation in trading of stocks and other securities.
  
  
• Better coordinating financial regulations among countries.
  
  

• Giving more countries voting power at the International Monetary Fund and the World Bank.
  
  

Besides the United States, the countries represented at the White House dinner Friday and meetings on Saturday will be Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. Those countries and the European Union make up the so-called G-20.


Australian Prime Minister Kevin Rudd said before he left for Washington that he would raise with fellow leaders his view that a system in which executives of financial firms are rewarded for maximizing risk "cannot be sustained." He said, "That's just dumb, it's wrong and it's bad."


Trade union leaders from participating countries planned to join AFL-CIO leaders Friday in meetings with several foreign heads of state, including Brazilian President Luiz Inacio Lula da Silva, and with IMF Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick.


The labor leaders are calling for re-regulation of global financial markets, an internationally coordinated fiscal stimulus and balanced economic growth to address income inequality.


AP Writers Jeannine Aversa and Jim Kuhnhenn contributed to this story from Washington.

-------------------------------------------------------------------------------------------------

[IT WOULD SEEM THAT SIGNIFICANTLY DIFFERENT ATTITUDES TOWARDS CAPITALISM - ANGLO-AMERICAN FREE MARKET-BASED CAPITALISM vs. EUROPEAN CONTINENTAL SOCIAL REDISTRIBUTIONIST CAPITALISM - CONTINUE TO PREVAIL IN TRANSATLANTIC RELATIONS. ONE RECENT NYU STUDY EXAMINES AND DEVELOPS METRICS TO ACCOUNT FOR THIS DIVERGENCE. IT FOCUSED ON THE VARIOUS ATTITUDES CONCERNING COMPANY OWNERSHIP, COMPETITION, PRIVATE PROPERTY RIGHTS, THE ROLE OF GOVERNMENT, ETC. THE STUDY CONCLUDED THAT CULTURAL & ENVIRONMENTAL DIFFERENCES LARGELY ACCOUNT FOR SUCH DIVERGENT VIEWS, AND MAY PERHAPS EXPLAIN THE SIGNIFICANT DISCREPANCIES BETWEEN THE UNITED STATES AND EUROPEAN PROPOSALS TO 'FIX' THE CURRENT GLOBAL FINANCIAL CRISIS.]

-------------------------------------------------------------------------------------------------
http://w4.stern.nyu.edu/sternbusiness/fall_2007/comparativeCapitalism.html

What accounts for Europe’s and America’s different attitudes toward the free market?

By Augustin Landier, David Thesmar, and Mathias Thoenig


STERN Business (Fall/Winter 2007)


Throughout the Western world, a vast region generally viewed as dominated by capitalism, people’s attitudes toward the virtues of free markets vary widely. According to the World Value Survey, only 22 percent of French people believe that owners should run their businesses and appoint their managers, while as much as 58 percent of Americans agree with this statement, to cite one example.


Academics have focused on a range of issues to explain the dispersion of pro-free market attitudes. Some argue that the uniqueness of US history – a large, ethnically heterogeneous society – has endowed modern American citizens with persistent anti-redistributive beliefs. The political economy view holds that people that gain the least from globalization are less likely to support it (for example, unskilled workers in the North, skilled workers in the South, people working in industries with high trade exposure). Still others argue that differences can be ascribed to cultural factors such as patriotism, neighborhood attachment, or a strong sense of identity.


We set out to understand what determines attitudes toward free markets by investigating how beliefs about the market economy vary across individuals, time, and countries. We constructed a dataset based on economic data like pension funding and stock market participation, and on opinion surveys, like the World Value Survey (WVS), which collects data on age, gender, and income, and measures attitudes toward economics, marriage, and religion across dozens of countries; and the Internal Social Survey Program (ISSP), whose 1996 wave contained questions on ethnicity, private property, and attitudes on state interference with free competition. By running regression analysis on this data, we were able to investigate the influence of certain factors in accounting for the differential attitudes.


Our analysis of the WVS focused on the answers given to questions about (1) the benefits/harms done by competition; (2) whether owners, employees, or the state should run the firms; (3) the merits of private ownership of business and industry; and (4) the trustworthiness of large firms. The data show a large variation in cross-country attitudes toward free markets. Two examples are given in Table 1, which focuses on the 18 richest countries in our sample and displays mean variables for all three waves of the WVS.

In the cross section of countries, preference for redistribution and attitudes toward free markets showed little, if any correlation. But this was less true at the individual level. People that tended to favor income equality also tended to distrust competition, large companies, and shareholder control of firms. In order to isolate the pure effect of “pro-free market” beliefs, we used as control variables attitudes such as: trust (many existing studies have shown that trust explains well the cross section of various economic outcomes, such as GDP growth); aversion to inequality (defiance toward free markets may stem from a concern for equality); pro-trade (in many instances, defiance toward market forces can be defiance toward globalization); and religion (academic work has shown, in general, that being religious is positively correlated with a positive perception of work and thrift). When we ran the data, we found that the unconditional correlations were not very high, which suggests that individual determinants of opinions are very diverse across attitudes. And yet we found that all four “market” variables are positively correlated with each other. Pro-competitive people also tend to support less equality, seem to favor free trade, and tend to be less religious and less confident in other people, for example.


Self-Interest


Why do attitudes toward free markets vary so much across individuals? The political economy view holds that self-interested individuals hold the beliefs that suit them best. In the developed world, for example, those least supportive of free trade also tend to have lower levels of education or work in industries where foreign competition is high. To test this hypothesis, we explored responses on two broad and distinct sets of issues: attitudes toward competition and attitudes toward the profit-motive. Attitudes toward ownership and competition shared some common determinants that proved to be statistically significant. Support for competition and owner control was also more prevalent among older people. (One possible explanation is that older people, being closer to retirement or more entrenched in their jobs, are more sheltered from the shocks of competition.) People with higher levels of income also showed strong support for market forces and self-interested behavior. Our preferred interpretation of this finding is that income is a proxy for the ratio of financial wealth to human capital. Another possibility is that income is a proxy for skill. Skilled labor is more protected from off-shoring and creative destruction that accompany for-profit management and tougher competition.

“French legal origin was strongly related to competition aversion, and British common law was related to a strong preference for owner control. These findings suggest that long-run institutional determinants rooted in the history and culture of a country dominate more recent developments in the organization of its economy.”


A more powerful test of the political economy view consists in combining the individual characteristics with country-level institutional features. We did so by looking at the cross-country dispersion in pension funding and financial development as a measure of the extent of financial markets institutions and compared how young and old people answered the questions. In theory, older people, who control a greater chunk of financial wealth, should display more free-market support in countries where they are the most likely to hold a larger fraction of financial wealth. Generally speaking, we found that in countries where pensions are funded, in financially developed countries, the old are much more likely to be supporters of the free market than the young. The probability that the young favor owner control was larger by 18 percentage points in the pension-funded countries. The probability that older citizens do so is larger by 30 percentage points.


It’s natural to wonder whether the institutional determinants that impact the support for markets come from very far in the past or are largely driven by recent developments. Several scholars have argued that in a cross-section of countries, distant legal origins matter. Compared with countries whose systems derive from French civic law, countries whose systems derive from British common law have a stronger propensity to protect debtholders and shareholders, have lower job protection, and facilitate entry by making business creation easier. When we ran the numbers, we found that legal origin has a significant impact. Notably, French legal origin was strongly related to competition aversion, and British common law was related to a strong preference for owner control. These findings suggest that long-run institutional determinants rooted in the history and culture of a country dominate more recent developments in the organization of its economy.


There’s more evidence that culture matters. Consider that only about 48 percent of American households own stocks directly or indirectly. This makes it unlikely that the median voter will support owner control or free competition just because it boosts the return of its portfolio. And yet, 57 percent of US respondents agreed with the statement that the “owners should appoint the management,” and more than 70 percent of US respondents who work for others agree with the proposition that “management should only care about profits.” The diffusion of equity ownership in the US cannot alone explain why American citizens support free markets more than do citizens of other countries.


Culture may be a factor in explaining such results. Scholars have argued that attitudes are affected by ethnic origins because they have a cultural component, and that culture is transmitted within the family. To test this hypothesis, we constructed two indices of cultural proximity to seven major western cultures: France, Germany, Russia, Spain, Sweden, the UK, and the US. The first index measures proximity to economic culture using as controls an aversion to inequality and a pro-trade attitude. The second index of cultural proximity is related to non-economic values, such as religious proximity.

We also looked at whether each country has been, at some point in history, a colony of one of the seven countries we mentioned above.

Our tests showed that cultural proximity to French economic attitudes predicts a significantly lower support for owner control, as does proximity to Germanic and Nordic economic attitudes.

Proximity to British attitudes does, however, predict a higher-than-average propensity to favor owner control. Countries with British legal origins and/or who have been, at some point, colonized by the British tend to display a higher degree of ownership control.

Meanwhile, countries that had been colonized by Spain and Russia are systematically less supportive of competition, while former Swedish and British colonies are more pro-competitive.


Generational Difference


For country differences in beliefs about markets to be permanent and unexplained by self-serving behavior, divergent beliefs of individuals need to persist throughout generations. But we also know that ideas and attitudes change over time. We tried to get at this issue by focusing on former communist countries and comparing attitudes toward free markets held by younger generations to attitudes of generations that were already adults when the Berlin Wall fell. We found that in the West, younger generations tend to be less pro-market in general. For people born after 1970, the probability of supporting owner control or competition was lower by 1 percentage point. The probability of supporting state ownership over private ownership was higher by 5 percent, a much larger difference.

But the generational divide was significantly larger in post-communist countries than in other countries. In former communist countries, the young are 7 percentage points more likely to support the for-profit motive, 9 percentage points more likely to support private ownership over state ownership, but only 2 percentage points more likely to support competition. These findings suggest that the forces that shape the preference for redistribution are not necessarily the same as those which shape attitudes toward market forces. Clearly, past shocks and shared experiences shape generation/population-wide attitudes.


To investigate further how fast beliefs can adapt from one generation to the next if the economic context changes, we looked at evidence from immigrants. For our purposes, we grouped country/language/ethnicity of origin into four broad categories: English-speaking countries, Continental Europe, Eastern Europe, and Nordic countries. The regressions we ran broadly confirm the results obtained on individual and country data. Respondents from English-speaking countries show consistently more support for both free markets and private property. Respondents of Eastern European origin show the strongest support for state ownership and an activist industrial policy.


We ran the same regressions focusing on US residents. The focus on the US is useful because it is the country where regions of origin are the most diverse. Here, we found mixed evidence that indeed, free market attitudes are strongly transmitted within the family and are weakly dependent of the economic context. For instance, respondents of Eastern Europe origin were 22 percent more likely to support redistribution; US residents of such origin were 6 percent less likely – not statistically significant – to do so. In general, the difference in attitudes between US citizens of Anglo-Saxon descent and other origins was both small and insignificant statistically, while the difference was strong on the worldwide sample. This suggests that such beliefs are much more conditioned by environmental characteristics than by transmission of family values.


What should we conclude from this investigation? First, we find that the traditional political view according to which individuals hold political opinions that are self-serving is consistent with the data. In general, individuals that would benefit more from a pro-market agenda exhibit stronger pro-market opinions. But this tendency alone can’t explain the sometimes significant differences between countries. The attitudes of a country toward markets are slow-varying and seem, on aggregate, to be strongly determined by historical and cultural factors. When it comes to explaining differences between countries’ views toward fundamental issues of markets and competition, economic theory matters. But so, too, do other factors, such as culture, legal systems, ethnicity, and family, matter.

Augustin Landier is assistant professor of finance at NYU Stern, David Thesmar is professor of economics at the Ecole Nationale de la Statistique et de l’Administration Economique (ENSAE) in Paris, and Mathias Thoenig is professor of economics at the University of Geneva.

-------------------------------------------------------------------------------------------------

[THE FINDINGS OF THE STERN BUSINESS SCHOOL STUDY REPRODUCED ABOVE ARE FURTHER CORROBORATED BY A FINANCIAL TIMES INVESTIGATIVE ARTICLE WHICH DISCUSSES HOW EUROPEAN GOVERNMENTS CONTINUE TO EDUCATE THEIR YOUNG TO DESPISE CAPITALISM.]

[See: European Governments Educate Young Against Free Markets & American Capitalism in Favor of European Welfare State Dream - Europe's School Books Demonise Enterprise, ITSSD Journal on Economic Freedom, at: http://itssdeconomicfreedom.blogspot.com/2008/01/european-governments-educate-young.html ].