Bush: “Why Did the Financial Collapse Happen on My Watch?”

January 15, 2009

During Monday’s press conference, President Bush was asked whether he ever felt the burdens of the presidency.  He responded “no” and explained that one would have to be a whiner to feel burdened by the job.  He then offered an example.  “I didn’t sit around and whine about ‘Why did the financial collapse happen on my watch?'”

This statement reveals – to put it in crude terms – a sort of “shit happens” mentality toward the economy and may explain a lot about why we find ourselves in such a mess.  We see that there is no tendency in the man to look back and wonder whether his policies played a role – whether he could have done anything differently to prevent it.  It just happened.  Not my fault.  Jim Lehrer’s interview of Dick Cheney, broadcast on PBS’s Newshour on Thursday night, reinforces this attitude in the administration.  Cheney said that the administration did a good job with economic policy, citing the tax cuts and their response to the financial crisis, preventing it from becoming worse.  The financial crisis itself was something that just happened outside their control.

I’m not saying the global economic melt-down is a result of policies that Bush enacted.  On the contrary, I believe that it dates all the way back to the signing of GATT in 1947, setting up the enormous trade imbalances that doomed the global economy from the beginning.  Every president since shares some of the blame for supporting a trade regime that was nothing more than a thinly-veiled global welfare state, slickly packaged with high-minded names like “free trade” and “globalization.” 

However, Bush was the only man for the last eight years who could have done something about it.  By the time he took office in 2001, it was clear that the trade deficit was escalating exponentially out of control.  But it seems that month after month, year after year, as the trade figures grew worse, he maintained his “shit happens” mentality about the whole thing, never pondering whether it was sustainable, where it would all lead, and if he should do something about it.

There’s a lesson here for Mr. Obama.  Things don’t just happen.  You’re inheriting a world of institutions and agreements, all of which were well-intentioned but some which will ultimately prove to have been horrible ideas.  When they blow up on your watch, you can’t just sit back and say that “I didn’t create this mess and it’s just dumb luck that it came crashing down during my administration.”  Your job is to root them out and fix them before that happens.  Take a good look at the structure of the global economy, the stated goals of the World Trade Organization, our trade agreements and the results of decades of trade negotiations.  And take a good look at the results of trade policy for the first 171 years of our nations history.  Compare those results to the last few decades and decide for yourself whether it’s time to make a correction.


Cause of U.S. Economic Melt-Down Captured in One Photo

November 23, 2008

http://www.reuters.com/article/ousiv/idUSTRE4AJ7LF20081123?sp=true

Check out the photograph at the top of this linked story.  Bush is flanked on either side and holding hands with Japanese Prime Minister Taro Aso and South Korean President Lee Myung-bak at the meeting of APEC leaders in Lima, Peru yesterday, November 22nd.  This photo captures perfectly the root cause of our economic melt-down, the leaders of two of the most parasitic economies in the world standing hand-in-hand with the leader of their “host” economy.  And everyone is all smiles.  Bush is all smiles because he’s clueless about the global trade welfare state that he supports on the backs of working Americans and is just happy to be fawned-over and well-fed.  Aso and Myung-bak are all smiles because the leader of the host economy upon which they feed is all too willing to keep the blood flowing.

U.S. President George W. Bush, Chinese President Hu Jintao, Japanese Prime Minister Taro Aso and other members of the 21-nation Asia-Pacific Economic Cooperation group, or APEC, said they would refrain from raising trade barriers over the next 12 months.

… Bush joined APEC peers in rejecting protectionism even if economies worsen.

Isn’t this the very definition of madness, to keep doing the same thing while expecting different results?  Of course, how could we expect anything else from Bush when his economic team of Paulson and Bernanke never utter a peep of protest about the trade deficit? 

But not everyone is happy.

Before the group met, Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon blamed the United States for starting the crisis and called for better banking regulations.

“Our closest neighbor and largest trading partner is the epicenter of the financial earthquake and global slowdown,” Harper said in a speech to business leaders.

Calderon said structural problems in the global economy were allowed to fester before spiraling out of control.

Of course, Calderon’s protests are a bit like a parasite complaining that the blood of its host tastes funny.  Mexico never complained while they racked up huge trade surpluses with the U.S. year after year.  But now that the parasitic economies like Mexico have sickened the host, all of a sudden it’s our fault.  Well, in a way it is our fault, in the same way it’s an owner’s fault for not giving his dog a flea bath, allowing it to be sickened by the parasites.  Our government is the owner of our economy and it has kept the flea powder of tariffs on the shelf for far too long.

We’ll be fortunate to survive another two months of Bush.  Obama seems like a very smart man.  Is he smart enough to understand the role of the trade deficit in bankrupting the nation?  If he is, does he also have the guts to do something about it?  He’ d better, while the nearly lifeless carcass of our economy still has an ounce of blood left.


Taxpayer Money Used to Eliminate American Jobs?!?!

October 30, 2008

http://www.time.com/time/business/article/0,8599,1855185,00.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.


Bush Urges Support for Free Trade Principles. Need I say more?

October 26, 2008

http://www.reuters.com/article/politicsNews/idUSTRE49O2DH20081026

The following excerpt is taken from the end of this linked Reuters article:

Bush warned against taking a protectionist turn in response to the current financial turbulence, saying free markets and free trade were fundamental to long-term economic growth.

“These policies have shown themselves time and time again to be the surest path to creating jobs, increasing commerce, and fostering progress,” Bush said. “And this moment of global economic uncertainty would be precisely the wrong time to reject such proven methods for creating prosperity and hope.”

Yeah, right.  The world is just awash in prosperity and hope right now, isn’t it?  Can there be any greater indictment of our free trade policies than the fact that Bush clings to them so desperately?  It’s like a drowning man crying out, “Water!  Water!” instead of shouting, “Help!”

There can be no doubt that our free trade policies have created jobs, increased commerce and fostered progress around the world – all at the expense of the United States.  Of course!  Pumping $700 billion into the rest of the world, year-in and year-out, will do wonders for the economies of nations like China, Japan, Korea and Germany.  But all it did for us is drive us into bankruptcy.  

Trade is a wonderful thing.  Really!  But the word “trade” implies some mutually beneficial exchange.  By definition, to be mutually beneficial, it has to be balanced.  It’s simply impossible for either side to sustain a large deficit indefinitely without eventually destroying their economy, and there’s nothing beneficial about that.  While trade is a wonderful thing, misguided trade policies like unfettered “free” trade skew the process and offer a slow but steady path to economic ruin.  

It’s time for a return to sensible trade policies that maximize the benefit of trade for the U.S. while maintaining a balance.


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.


WTO Negotiations: U.S. Gives, China and India Take

July 29, 2008

http://www.reuters.com/article/GCA-Agflation/idUSL747098220080728

Here’s yet another example of America’s prowess in trade negotiations and why the U.S. economy is now collapsing under the weight of an unbearable trade deficit. The WTO (World Trade Organization) is in a panic to conclude its Doha round of negotiations before Bush leaves office, knowing that he is a patsy who will sign anything. And, of course, America’s ambassador to the WTO cares nothing about the U.S. economy. He’s a Bush stooge who is working hard to please his boss. So he has literally given away the farm (by agreeing to huge cuts in farm subsidies, not to mention more cuts for American manufactured goods), and is now surprised that China and India are reneging on previous “voluntary” agreements.

The outcome here is predictable. The U.S. will cave in and back off of its demands, and there will soon be an agreement. The U.S. will cut subsidies and tariffs (what few remain) and China and India will not. There’s nothing you or I can do about that. But when the agreement comes to a vote in Congress, that’s where we’ll have our say. I’ll keep you posted as to when this happens and when we all need to bombard our legislators with calls and letters to prevent the further compounding of our national economic disaster.