Is Globalization in Its Final Days?

February 19, 2011

Globalization, a process begun in wake of World War II with the signing of the Global Agreement on Tariffs and Trade in 1947, may now be in its last days.  Whether those days number in the thousands or hundreds is yet to be seen but, make no mistake, the end of global economic cooperation is near.  As reported in the above-linked article about the G2o meeting in Paris, export-dependent nations, lead by China, are dragging their feet on the 2-step effort to measure and rectify global economic imbalances. 

Finance chiefs of the world’s dominant economies on Saturday pressured China to drop its resistance to a deal on tracking dangerous imbalances in the global economy, in an effort to revive the Group of 20 rich and developing nations as the forum to prevent further financial crises.

More than any other imbalance, current accounts (trade supluses and deficits), have taken center stage in the talks.

China has so far opposed targeting current account surpluses — which show that a country sends much more goods and capital abroad than it receives …

But patience is wearing thin.  Global leaders understand that such imbalances were at the root of the economic collapse of the past couple of years and that the capacity to deal with another such crisis has been exhausted.

The stakes are high: French Finance Minister Christine Lagarde warned Friday that a failure to address imbalances “leads us straight into the wall of another debt crisis,” while President Nicolas Sarkozy said that countries must not get complacent as some parts of the world are starting to recover from the crisis while others are still lagging behind.

“That would be the death of the G-20,” Sarkozy warned.

The following is perhaps the most frank admission I’ve seen yet of the role that global trade imbalances played in the global economic melt-down:

What is clear to most economists is that sticking to the status quo could be fatal.

In the years before the financial meltdown of 2008, countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value, U.S. Federal Reserve Chairman Ben Bernanke told his G-20 colleagues Friday. But the U.S. failed to safely absorb money flooding in from emerging nations like China, Middle Eastern oil countries and industrialized countries in Europe, Bernanke said.

“… the death of the G20.”  “Sticking to the status quo could be fatal.”   Strong words that highlight the urgency.  Bernanke and others know very well that a repeat of the recent economic crisis will be exactly that – fatal.  The global economic system will come completely unglued and it will be every man (country) for himself. 

How much time is left?  That’s the big, unanswered question.  But if recent history is any indication, it’s not long.  Consider this:  the economic bubbles we’ve witnessed in the last two decades have been fueled by the trade imbalances.  American trade deficit dollars have to come back to America, one way or another.  In the ’90s, those dollars bought stocks and inflated a huge stock market bubble.  It took about six years for that to run its course and for the bubble to burst in March of 2000.  Then those trade deficit dollars were funneled into real estate in the form  of mortgage-backed securities.  Once again, it took about six years before that nearly collapsed the entire global financial system. 

It’s now been about three years since that collapse in late 2007/early 2008, and nothing has been done to address trade imbalances.  First, trade dollars inflated a bubble in treasuries – a bubble whose bursting has been delayed by the Fed’s program to buy up new treasury issues.  More recently, those trade dollars are re-inflating another stock market bubble.  History suggests that there may only be another three years to go before the next economic collapse.  If the G20 can’t address these imbalances in a coordinated way, then the U.S. will have to go it alone and do what’s necessary to restore a balance of trade.  It’s that or economic oblivion.

Export-dependent nations, most notably China, will never go along with any G20 plan to rectify imbalances, wiping out their huge trade surplus.  They may play along a bit longer to buy time, but it won’t buy them much.  When time runs out, so too will the global economic engineering that has forestalled the day of reckoning for overpopulated, export-dependent nations.  From my perspective, that day can’t come soon enough.

Bernanke to Graduates: Be Happy

May 10, 2010

Federal Reserve Chairman Ben Bernanke told graduates at the University of South Carolina on Saturday to worry less about making money and focus instead on being happy.  This might seem like good advice if it came from a psychologist, but we should all be wary when our economic leaders start talking this way.  It may signal a shift in U.S. economic policy.

“Happiness” is the latest half-baked idea being served up by the field of economics.  In neoclassical economics, the focus was on macroeconomic growth.  Put in labor and capital, and out comes all of the stuff that satisfies our endless wants and needs.  Keep increasing the inputs and the output can be grown toward infinity.  Per capita consumption was taken for granted.  It would always be there to sop up the output.

Beginning sometime in the 2nd half of the 20th century, economists began to awaken to the fact that, though our well of wants and needs may be bottomless, the well of natural resources (or “natural capital,” as they are known to economists) is not.  Theories of “sustainability” were born, in which manufactured capital could be substituted for natural capital, thus avoiding collapses in the finite supplies of resources.  Per capita consumption could be maintained, but shifted in a way that would assure sustainability.

More recently has come the realization that maintaining current levels of per capita consumption while sustaining our stocks of resources is a pipe dream.  So what is the field of economics, devoted to increasing the welfare of mankind, to do?  Redefine welfare.  Economics now eschews per capita consumption as a measure of wealth or welfare in favor of a new measure – “happiness.”  Economists have taken note of studies that show that, beyond some minimal level of income – about $15,000 per capita – little additional happiness is provided by growing incomes.  Once our needs and a few basic wants are met, further pursuit of wealth in an attempt to satisfy more and more wants becomes counter-productive.  The conclusion is that we can all be happier with much less.  Health care, job security, old age security – these are the things that really make people happy, economists have concluded, and these are where economists and policy-makers need to focus their efforts.

There’s just one problem.  In this happy new world of low per capita consumption, economists haven’t explained what we’ll all do for a living.  Per capita consumption and per capita employment are intertwined.  As one goes, so goes the other.  Subtract from the output in the old equations of neoclassical economics, and the labor input will be left standing naked with nothing to do.  Nor do the advocates of this new “happiness” economics explain the source of revenues that governments will require to enhance health care and old age security. 

In addition to defining what makes us happy, the same happiness studies also reveal what makes us unhappy.  Far and away, the biggest killer of happiness is unemployment.  The field of economics has now traded one paradox for another – replacing infinite growth in a finite world with decoupling per capita consumption and per capita employment.  Per capita consumption has now transitioned from being taken for granted under the neoclassical theories of growth to being the bogeyman of economics. 

The problem, of course, is that economics has turned its scorn upon per capita consumption when the real problem is total consumption.  But the latter would require an admission that population growth is the real problem, something that economists, still curled in a fetal position from the beating they endured upon the seeming failure of Malthus’ theory of overpopulation, are still unwilling to do. 

Because this all sounds so unbelievable, you may think that I’m making this stuff up.  I’m not.  Check out the following article.  Go to section 3, “consumption, happiness and sustainable welfare,” beginning on page 216, for a good summary of the new focus on happiness. 

Toward a new welfare economics for sustainability

What’s really scary is that this stuff will soon begin creeping into U.S. economic policy.  Falling incomes will soon be rationalized as something beneficial to your “happiness.”

Economics for Politicians

December 8, 2009

The above-linked op-ed piece, “Economics for Politicians,” appeared on the Reuters web site this morning.  I found it interesting because it echoes a post on the same subject that I made over a year ago, as our economy began to unravel.  (See Advice for Next President: Listen to “Kooks” and “Weirdos”.)  This Reuters piece  is a good indictment of the field of economics.  Here’s some selected excerpts:

President Barack Obama was happy enough to host a summit on job creation on Thursday. Economists were in attendance, among others. But few political leaders feel comfortable with the dismal science in all its glory.

… Current and future leaders shouldn’t feel embarrassed about finding the subject daunting or depressing. It is both.

… If President George W. Bush had been a little more curious, perhaps he would have placed less faith in the no-worry approach to regulation and bubbles expounded by Alan Greenspan, then chairman of the Federal Reserve.

Few politicians seem to learn this lesson. Obama’s economics team is made up almost entirely of professional insiders. Such choices make it easy for critics to say the administration has borrowed a narrow economic worldview from Wall Street.

The following point is critical – it’s the very message I’ve been hammering home in my book and in this blog:

The thought provides a neat segue into the second rule: unemployment can matter more than growth. The recession has brought output down to 2006 levels in most rich countries. That’s not good, but it needn’t be a huge problem. There’s still an awful lot of production and consumption going on by the standards of any year in history other than the last two or three.

Today’s level of GDP is exactly the same level that, only a couple of years ago, constituted economic boom times and had everyone partying to the tune of “let the good times roll!”  What really matters is employment.  GDP is almost inconsequential, as I tried to point out in Chapter 1 of Five Short Blasts

Unemployment is a much greater evil. Human dignity is lost when workers who want jobs cannot find them. Chronic unemployment is also bad for future economic growth, as idle workers lose skills and motivation.

The recession has pushed up unemployment rates significantly in the U.S., and somewhat less in European countries with stronger job protection laws. The conventional economic toolbox is not designed primarily to help the jobless find their way back into employment. Government programs help a little, but perhaps there are some bright iconoclast economists around with better ideas.

I’m right here – ready, willing and able to help if there are any politicians out there willing to listen.  But I won’t hold my breath. 

Obama Has Plan to Boost Exports. I Smell a Rat!

November 13, 2009

The above-linked CNBC article reports that Obama has a plan for boosting exports to Asian nations, a plan he’ll unveil in his upcoming trip to the region.  

President Barack Obama said on Thursday he planned to discuss a strategy with Asia Pacific leaders calling on their countries to import more U.S. goods and the world to rely less on exporting to the United States.

“In the coming days, I’ll also be meeting with leaders abroad to discuss a strategy for growth that is both balanced and broadly shared,” Obama said before leaving on an Asia trip that includes a meeting of APEC (Asia Pacific Economic Cooperation) leaders in Singapore.

“It’s a strategy in which Asian and Pacific markets are open to our exports, and one in which prosperity around the world is no longer as dependent on American consumption and borrowing, but rather more on American innovation and products,” Obama said.

Since boosting exports is something over which the U.S. has absolutely no control, I smell a rat.  Exports are a function of foreign demand for U.S. products and we have no control over that.  We’ve been trying for decades – cutting our manufacturing costs, complaining about exchange rates, filing complaints with the WTO (World Trade Organization), boosting “innovation” – all to no avail.  If our trading partners are unwilling or, more precisely, unable to import more American products, they won’t.  So what’s the plan?  Does President Obama plan to send container ships-full of American products to Asia and then dump them in the ocean?  Hey, I have a plan to boost book sales, too.  I can advertise and cut the price of the book all I want but, unless I put a gun to your head, you won’t buy the book unless you want to. 

Well, perhaps there is another way.  I could give you $20 to buy the book, which retails for $16.95.  Who wouldn’t jump at that deal?  Of course, I’d have to just print money to keep that offer going for very long, but at least I could delude myself into believing that book sales are going gangbusters and, as long as you’re willing to overlook the fact that the money is couterfeit, then you’ll be happy too.  And my printer will be happy as a clam. 

Could it be that Obama’s plan is something similar?  We’ve seen that he and Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke have no qualms about cranking up the printing press to boost the economy.  The problem has been that Americans then use that money to fund the purchase of imports, boosting foreign economies and not our own.  So wouldn’t a more effective use of that money be to just give it to China, Japan and Korea on the condition that they use it to buy American products? 

Yeah, yeah, I know:  it’s a stupid idea that’s doomed to failure, once mountains of American products pile up on the wharves at their ports, and once we realize that those funds are being diverted to expand China’s military.  But it would boost American manufacturing in the short term, for maybe a few years, which is all President Obama needs to win a second term and to claim a legacy of having revitalized the manufacturing sector of America’s economy.  Publicly, both Obama and the Asian nations will claim that this money is a “loan” from the U.S., but privately they will agree that it’s nothing of the sort; just printed money that’s never to be repaid. 

If this isn’t the president’s plan, then something equally twisted is likely to emerge.  If our leadership isn’t smart enough to fix our broken trade policy in a way that’s within our control, by returning to the sensible application of tariffs that once built this nation into the world’s preeminent industrial powerhouse, then its only alternative is to strike preposterous deals that gloss over our trade imbalance and give the appearance having done something meaningful.

Dallas Fed President Fisher – Is This Guy Serious?!?!

February 2, 2009

I couldn’t resist this one!

Dallas Federal Reserve President Richard Fisher warned on Monday against “Buy America” provisions in a proposed fiscal stimulus law and said it could lead to devastating protectionism.

“Protectionism is the crack cocaine of economics,” Fisher told C-Span television in an interview for its “Washington Journal” program.

“It provides an immediate high that leads to economic death. We cannot afford to go down that route,” said Fisher, who is not a voting member of the Fed’s policy-setting committee this year.

It’s hard to believe someone would say something like this.  Is he talking about the same kind of protectionism employed by the U.S. for the first 171 years of our nation’s history to build ourselves into the world’s preeminent industrial power – the wealthiest nation on earth?  Is he talking about the same protectionism that has been employed by the WTO  (World Trade Organization) in favor of two thirds of its member states, including China, in order to pump up their economies at America’s expense?  Is he seriously suggesting that a move toward a balance of trade would lead to “economic death?”  How does that wash when one compares the results of China’s economy, which has been growing at a double-digit rate, to America’s long decline?  “Economic death?!?!”  Has this guy read the papers or peeked out the window of his penthouse office lately to see that we’re already there?  You have to wonder if the guy’s experience with crack cocaine is something beyond the metaphorical. 

And I love the last paragraph:

“The job of the Federal Reserve is to … maintain price stability while we engender growth and employment in the United States,” Fisher said.

Can you believe this guy has the nerve to end by admitting that his job is to “engender growth and employment?”  I think it’s time for a performance review, don’t you?  And not just him.  Let’s have one for his boss, Bernanke, the Chairman of the Federal Reserve, too.  Not once since taking over from Greenspan has he ever uttered a word of warning about federal budget deficits or trade deficits. 

It’s no wonder that our whole financial system is in a state of collapse when it’s run by people who can’t even understand the basics of a balance sheet. 

Federal Reserve Branches Out into Retail Lending

November 25, 2008

I’ve been wondering how long it would be before the Federal Reserve became impatient with banks’ reluctance to return to their irresponsible lending of the pre-housing bubble days.  It seems that day has arrived and, although there’s no details yet, the Federal Reserve has announced plans to make loans directly to consumers – auto loans, student loans, credit cards – whatever. 

U.S. Treasury Secretary Henry Paulson plans to announce on Tuesday the formation of a program to increase the availability of auto loans, student loans and credit cards, the Wall Street Journal reported, citing people familiar with the matter.

The lending facility, which will be operated by the Federal Reserve, is expected to provide loans to investors who want to buy securities backed by credit cards, auto loans and student loans, the people told the paper.

Are you kidding me?  Securities backed by credit cards, auto loans and student loans?  Unless the interest rate on such securities is somewhere around 100%, I think I’d feel much safer buying credit default swaps backed by sub-prime loans!  Who in the world would buy such a risky security?  Oh, wait, I know!  The Federal Reserve will buy them!  They’ll sell them to themselves and then, taking a cue from Wall Street, will slice them and dice them, get some patsy ratings agency to give them a AAA rating, and then sell them China, Japan, Europe and Saudi Arabia.  Brilliant! 

Is it just me, or does anyone else get the feeling when hearing Paulson speak that our Treasury Department isn’t run by the sharpest tool in the shed?  When he and Bush meet to discuss the economy, how much of the conversation is spent exchanging long “uuhhhhh”s?  What does Bernanke bring to the table aside from the keys to the printing press? 

It’s unclear whether there will be restrictions on the types of investors who are able to borrow money, how the Federal Reserve will judge their credit worthiness and how the government will ensure they are using the loans to buy the intended assets, the Journal said.

I think it’s safe to say they’ll give the money to anyone for any purpose.  They don’t give a damn what happens to the money.  It’s just taxpayer money.  It’s not as though it’s something they have to treat responsibly. 

I’m seriously considering moving all my investments to an off-shore account somewhere, safely out of the reach of these idiots.  Hurricane season is over.  Grand Cayman Island would be a nice place to spend the winter.

Taxpayer Money Used to Eliminate American Jobs?!?!

October 30, 2008,8599,1855185,00.html?xid=feed-rss-netzero

It’s being reported today that the details of the GM-Chrysler merger have been settled between GM and Cerberus Capital Management, owner of Chrysler, and that the deal may be done by Tuesday. Just one small detail stands in the way – financing. GM doesn’t have the money to pull it off. That’s where the federal government comes in. The governors of six states have signed a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, imploring them to quickly provide federal assistance, without which it is feared that all domestic automakers will go bankrupt, with catastrophic consequences for the entire American economy.

Although GM is selling this merger to the government as the best way to salvage jobs in the domestic auto industry, claiming that both companies will go under without it (which may very well be true if nothing is done), its real interest (beyond mere survival) is in eliminating a competitor while increasing sales and cutting costs.

Projections are that, if this merger takes place, approximately 35,000 Chrysler jobs will be eliminated and that nearly five times that many jobs will be lost in total when parts suppliers and other ancillary companies are included in the impact – a total loss of about 165,000 jobs. Yes, GM will improve its sales volume slightly by the elimination of this competitor, but the vast majority of Chrysler’s sales volume will be lost to foreign competition. What this means is that, if the federal government provides the funding for this merger, billions of American taxpayer dollars will be used to facilitate the elimination and outsourcing of 165,000 American jobs! Then, billions more will be spent on unemployment payments and billions more will be added to the national debt when the income taxes collected from those 165,000 workers falls to zero.  So far, I’ve heard no discussion of this snake-eating-its-tail scenario, where taxpayer money is used to eliminate taxpayers’ jobs.  This should be a pitchforks-in-the-street moment!  Where is the outrage? 

GM is pushing frantically for this deal to be done by Tuesday. Why Tuesday? What’s so magical about that day? The election. If Obama is elected, as appears likely, GM fears that it will then have to deal with an administration that will take a dim view of using taxpayer money to destroy so many American jobs. An Obama administration will still do a deal to salvage the domestic automakers, but will be far less likely to do a deal that eliminates Chrysler as a separate entity. GM would much rather close the deal with the Bush administration, Henry Paulson and Ben Bernanke – people who don’t give a rat’s behind about American jobs.

There are much better ways to save all of the domestic auto industry. Loan GM the money it needs to survive a bit longer and take a stake in Chrysler, perhaps even all of it. Couple that with some new protections of the domestic auto industry, like tariffs on imports, and within a couple of years we’d have an explosion in domestic sales. The government would soon be able to sell Chrysler at a handsome profit for taxpayers. The time is past for timid steps. Without the protection afforded by tariffs, the domestic auto industry will be doomed regardless of what other measures the government or the carmakers may take.

G7 Finance Ministers in Washington: Host, Fleas and the Missing Leech

October 11, 2008

This weekend, there is a meeting of parasites in Washington to discuss the host’s shortage of blood.  The finance ministers of the G7 (“group of seven” major economic powers of the world) are meeting in DC to discuss the global economic collapse brought on by the U.S. finally being sucked dry of all its assets through the trade deficit.  Conspicuously absent from this group of mites is China, the six-inch-long bloodsucking leech that’s been latched onto a main artery of America’s economy. 

Every once in a while, the head of the host, Bush, pops up to reassure us all:  “Everything’s OK!  We’re workin’ on it!  It’s hard work!  We’re all in this together and we’ll get out of it together!” 

Although I’m making light of it, this meeting is significant because it may be a crucial turning point for our economy if the talks break down.  Although the statements emanating from the meeting express unity and resolve, don’t be fooled.  The other six of the G7, our parasitic trade “partners,” came to town mad as hell.  Although Russia isn’t included, Putin has been very open about blaming the U.S. for this global crisis.  European leaders have been more muted in their criticism, but generally agree with him.  All are angry that the U.S. assets they’ve purchased with our dollars are proving to be worthless.  They want their money back.  In the meantime, the U.S. is making a case for them to put even more blind faith into our bankrupt economy. 

These talks are doomed to collapse or, at the most, to produce one more statement of “unity” and “resolve,” crafted to mask the behind-the-scenes vitriol.  The problem is that all sides enter into these talks believing in their own B.S., to put it rather indelicately.  Our trade “partners” believe that free trade and globalism works, because the surplus they have with the U.S. does a very nice job of propping up their bloated labor forces, and they want to keep it going.  The U.S., on the other hand, believes that if we just stick with it long enough, things will turn in our favor in a big way.  All ignore the reality of the situation, that trade deficits are simply unsustainable for any protracted period of time, and America’s is now thirty-three years long and growing.  Another problem is that the worst economic parasite of them all, China, isn’t even represented at this meeting. 

One of two things will happen.  Either the other six of the G7 will capitulate and agree to invest blindly in American banks and other institutions, ignoring their own well-being  and their well-founded suspicions that such investments are worthless, or the talks will devolve into a shouting match, probably led by Japan and Germany demanding that we make good on their investments, while Paulson and Bernanke demand more blind faith in their endless bail-outs.  In a best-case scenario, the angry discussion may turn toward trade, with the U.S. blaming the others for not meeting their obligations.  If that happens – and it very well could – we may finally have reached a turning point in our decades-long economic nightmare. 

As much as this economic turmoil hurts, especially the huge drop in equities, it may work out for the best.  There may be a bright light at the end of this very dark tunnel – the dawning of the realization among America’s leaders that huge trade deficits can’t be sustained, and that positive steps must be taken to restore a balance.

Examples of “Kooks” We Should Pay Heed

September 22, 2008

 No sooner did I finish my previous post, suggesting that our next president needs to begin listening to economists who, until now, have been dismissed as “kooks” and “weirdos” by the now-discredited high rollers like Paulson, Greenspan and Bernanke, when along comes this Fortune article with a perfect example – economist John Williams of, who coined the term “Pollyanna Creep” to describe the phenomenom of revising economic data to make things appear rosier than they are. Williams contends that today’s economic melt-down has roots that go back much further than the mortgage crisis, that we’ve been deluding ourselves for many years that the economy is in much better shape than it really is.

No shortage of villains stand accused of igniting the brushfire raging across Wall Street: greedy lenders, gullible home buyers, negligent regulators, numbskull credit ratings agencies, and vicious short-sellers, for starters. Maybe they share the blame. But what if the underlying problem goes deeper? What if the reality is that the US economy has been a lot worse than was thought for a long time, and now the chickens are finally coming home to roost?

That’s the dark thinking beyond what is known as “Pollyanna creep,” a phrase coined by an economist named John Williams and supported by a cadre of other macroeconomic dissidents.

Williams, who lives in California, runs a Web site called that trades in the idea that key government statistics have become so optimistically misleading as to become essentially useless. Yes, this sounds a bit like the thinking of the black helicopter crowd, or the plotline of a Matrix movie. But given what’s gone on in the financial sector of late, it doesn’t sound quite so fringe.

The article singles out GDP (Gross Domestic Product) and CPI (the Consumer Price Index) as a couple of macroeconomic statistics that are especially worthy of scorn – overly optimistic to the point that they have been rendered useless, the very point I made in the first chapter of Five Short Blasts. If you’ve followed this blog for any length of time, you know that another favorite of mine is unemployment. To suggest that our unemployment rate is only 6.1% (the current “official” rate) is ludicrous when the annualized rate of weekly jobless claims is closer to 16%. In the past, while still chairman of the Federal Reserve, Alan Greenspan claimed that unemployment rates of 5% or less represented “full employment” and worried about the inflationary potential, all while weekly jobless claims still hovered above 300,000 and while thousands of people in manufacturing were losing their jobs ever week.

Another fringe economist cited in the article is Kevin Phillips, former Nixon advisor and author of Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.

In his recently-published and rather depressing book “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism,” onetime Nixon White House adviser Kevin Phillips discusses Pollyanna creep as part of an era of “Bullnomics: the pied-piping of America toward a misleading financial ideology (the efficiency and reliability of markets), buttressed by a spectrum of dubious thinkers, doctrines and enablers.”
Phillips contends that some of the biggest changes to CPI calculation took place between 1997 and 1999, “while the public and the politicians were preoccupied by bull market euphoria and the actions in Congress to impeach Bill Clinton.”
In their effort to reduce Social Security outlays – and buttressed by a belief that CPI overstated inflation – government economists with backing by Federal Reserve Chairman Alan Greenspan implemented controversial modifications to CPI that, among other things, tried to measure increased satisfaction from goods.


This Fortune article may be a good sign that, already, the Paulsons and Bernankes of the world are being pushed aside while we begin to look to the “fringe” economists, the “macroeconomic dissidents,” for real answers.

The Pollyanna creep crowd ….  may have some currency. Amid the talk of hundreds of billions in financial market clean-ups, a debate over the accuracy of economic bellwethers may be a can of worms worth opening.

Advice for Next President: Listen to “Kooks” and “Weirdos”

September 21, 2008

 Only weeks ago, we were assured by both Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that all was well. To hear them tell the story about the financial crisis, no one could see it coming. This is true only if you count as “nobodies” the thousands of people labeled by these globalization cheerleaders as “kooks,” “wackos,” “weirdos,” “alarmists,” “nut cases” and “protectionists” – the people who have been warning us for many years that our trade, economic and monetary policies were heading us toward financial disaster.

And make no mistake, we stand at the precipice of the worst economic catastrophe in the history of the world, one that would make the Great Depression pale by comparison. This morning, I watched Senator Dodd and Representative Boehner on ABC’s “This Week” with George Stephanopoulos. Dodd recounted that he and Boehner and other congressional leaders have been briefed on many scary things over the years, but nothing like what they heard from Paulson and Bernanke. When Stephanopoulos pressed them for details about what exactly Bernanke said, they refused to answer. They were so mindful of the the fear and panic that could be provoked in the general population that they wouldn’t paraphrase, summarize or even characterize what was said. But Dodd did say this: “When Bernanke finished speaking, there was a stunned silence for 10-15 seconds. It was as though all the air had been sucked out of the room.”

I can take a good guess at what he said. I believe Bernanke revealed that, within days, if nothing was done, everyone in America would be bankrupted and the economy would grind to a complete halt. Our foreign creditors were on the verge of pulling their money out, a sum of money that exceeds the cumulative net worth of the entire population of the U.S.

Now we see that the Henry Paulsons, the Alan Greenspans, the Ben Bernankes and all of the globalization cheerleaders and fans of deregulation have been ultimately proven wrong. Their theories and philosophies have been atrocious, abysmal failures. Now, in a panic, they’re ready to trade it all away for a Grand Plan that smells an awful lot like socialism or something worse, something more akin to a corrupt communist state or a dictatorship, set up to benefit the ruling class, at the expense of the proletariat.

They had their chance. They’ve failed badly. It’s time to give all of the “kooks” and “weirdos” out here in the blogosphere their due. They got it right. It’s time to consider that it is they who are the real economists we should be listening to, and cast aside the buffoons who have held sway for far too long. Our next president would be well-advised to gather a meeting of the minds of the best of these people and hear them out. Study their blogs and give careful consideration to what they’ve been saying for years. It’s time to pay attention to the people who had it right all along. History can either mark September, 2008 as the beginning of the end of American prosperity, or as the turning point in economic philosophy that pulled our nation from an economic abyss and propelled it to new heights.