"Fiscal default is nigh, insist the doomsayers: 'Repent and retrench before it's too late!"
Prof. Martin Wolf, in The Financial Times, July 8.
One thing you can say about the ever more aggressive deficit and austerity hawks, is that they're every bit the believers that their cousins the Christian Fundies are. Probably even more so, since - apart from Frederich Hayek - they have no "Savior" on whom to project their "salvation" wish fulfillment fantasies.
Of course, given Hayek was the lunatic that once pronounced saving money is "hoarding" and money works best in the capital markets, we may well regard him as a fruitcake anyway.
But let's cut to the present. In his excellent Wall Street Journal column 'Avoiding the Austerity Trap' (it's a wonder he still has one giving how many sacred cows of supply side voodoo economics and "free market" bunkum he's gored) Thomas Frank correctly notes that austerity would be a "dreadful trap at the moment, but the urge to blunder burns hotly among the deficit priesthood these days".
And he correctly names Peter G. Peterson as one of the main deficit hawk culprits. Even more of a culprit because this miscreant and hedge fund honcho uses the alarm of massive deficits to conceal his internal yen to gut Social Security and Medicare. As Frank notes (ibid.)
"Once upon a time Mr. Peterson preached a gospel of thrift through books and essays. Since the early 1990s, however, he has built up two foundations to help fight his war on entitlements - the Concord Coalition, and The Peter G. Peterson Foundation. - both of them dedicated to his obsessive vision of fiscal austerity".
Frank goes on to note that their work goes on manifested in "a confusing welter of commissions, studies and public events involving deficit hawks from both parties.". Frank pinpoints one conference in April - the Peter G. Peterson's "Fiscal Summit" - which provided a ready forum for Alan Greenspan (the same guy that wanted to cut Social Security benefits to extend the Bush tax cuts).
Why do we listen to these crazies? Well, because they make their market BS sound so very convincing, much like fundies make their salvation recipe for afterlife insurance sound so plausible (at face value - though when one digs, it collapses).
Is Peterson actually as big a threat as Frank makes him out to be? (And which letter writers to the WSJ subsequently objected to, assuring everyone that Mr. Peterson is an upstanding son of a Greek immigrant who "worked his way up". Maybe - but that doesn't give him carte blanche rights to cut the rug out from others!).
In his excellent book, Batttling Wall street - The JFK Presidency (Sheridan Square Press), Donald Gibson has noted (p. 141) that during the 1992 presidential campaign - when the issue of the destructive nature of speculative market forces arose, one could only find evidence of (economist) Carroll Quigley's historical observations that "dominant economic forces typically do not see the need for (financial) reforms or intervention". Well, why would they, since they would miltiate against their vested interests.
He goes on:
"(Peter) Peterson's complete refusal to address or even acknowledge the financial-corporate establishment's destructive action is an example of this problem. So is Peterson's determination to blame working and middle class Americans for the crisis".
Don't forget that much of that crisis was fomented (as was the 2008 credit meltdown) by financial movers and shakers operating in the shadows, as with the 1989 Savings and Loan Crisis, in which hapless ordinary citizens were screwed out of their savings while the elites were bailed out.
How are the working and middle class to blame? Gibson again, p. 137:
"According to Peterson our current mess began in the 1970s. It is not the interest rates or energy prices he has in mind. Rather, he says that in the 1970s and 1980s there was too much growth in government spending, too much welfare for the middle class and too little saving. Specifically, he says, the country made a mistake when it began protecting middle class entitlement programs in the 1970s."
Note that by "too little saving" he didn't mean in secure FDIC-insured, passbook accounts earning decent interest, but in risky equities that could vaporize at the drop of a hat (as occurred in the market crash of 1987). . In terms of "protecting entitlement programs" he's referring, of course, to the Nixon Administration's passing of the Social Security Cost of Living Allowance, which has made it possible for most seniors to retain a shred of deginity in the face of exploding health care and other costs. But let's examine what the case might have been had no COLA been approved, as Mr. Peterson wished. Assuming a mean inflation rate (deliberately lowballed) of 5% a year starting in 1980, that would have meant a loss in dollar purchasing power of 100% over twenty years.
Applied to my own parents' Social Security - which came to just over $2000 a month in 2000, that would have meant under Peterson's rubric they'd barely have received $1,000, or half their actual amount per month. My dad would likely have had to have worked much longer, even in poor health, and my mom might have had to sell all her belongings. Their medical costs would have kept going up and ultimately, they'd never have been able to pay off their mortgage as they did in 2002.
So, in other words, what Peterson and his monied ilk are after is indentured servitude for the middle class. And why not? Historically, we know that when the middle classes are economically undermined they lose political interest in the overriding priority for work and survival. This way Fascism marches in.
In any case, all Peterson's claims have been roundly dismantled, e.g. in Jacob S. Hacker's book, 'The Great Risk Shift' (Oxford University Press, 2008). As he points out (p. 5-6):
"Over the last generation, we have witnessed a massive transfer of economic risk from broad structures of insurance, including those sponsored by the corporate sector as well as government, onto the fragile balance sheets of American families. This transformation, which I call 'the Great Risk Shift' is the defining feature of the American economy.."
And indeed, one only has to remove his or her blinders and see what's transpired. For those of us who lived through the properous post -War years from 1948-1960, the difference is as glaring as night and day! While in the 1950s a family could get by with one earner, today that's all but impossible. While in the 50s families could safely save their money in bank accounts bearing 5-6% interest, today they must settle for barely 0.5% if lucky. (Thanks to the Federal Reserve and its easy money low interest policy). Or, they can chase yield in risky stock and bond market investments. And we've seen what that's done to 401k's with the result that.....people have to work longer to make up their losses (The Peterson Principle again!)
Hacker, in his exposition, tallies other major losses (risk shifts) in the intervening years, all of which appear to have fallen off of the austerity hawks' radars:
- Loss of stable middle class income and benefits
- Loss of a guaranteed pension (replaced by the do it yourself 401k)
- Loss of good health insurance, or affordable health care
- Exploding home prices: median cost of a home in 1963 was $33,000, now over $200,000
Is it any wonder grown kids have to move back in with their parents following college graduation, given this?
Don't let anyone fool you. The deficit hawks are not just after saving our federal balance sheet. If they were they'd push for immediate shutting down of the Iraq and Afghan occupations, which are bleeding off over $150 billion a year. All going to Chinese bankers, who happily buy T-bonds to support our debt.
The real objective or target of those like Peterson is to finally kill Social Security and Medicare, and let people who depend on both catch as catch can. Or not. This has been their wet dream since FDR authored social insurance in 1935, as noted by author Michael Hiltzik in his The Plot To Kill Social Security.
This is also why Deficit "commissioner" Alan Simpson is full of it when he asserts the commission only wants to stabilize it, not cut it. The easy solution, which none of these hawks want, is simply to raise the FICA level past $250,000. That is no chip off the block of the rich, and it would show the world that Americans - the rich ones- have a sense of the commonweal.
Ad for Peterson, the best bet is to ignore him, his screeds, and his phony commissions. As for Obama, he should have known better than to implement such a fiasco from the beginning. Hayek must be dancing from under his grave.
Prof. Martin Wolf, in The Financial Times, July 8.
One thing you can say about the ever more aggressive deficit and austerity hawks, is that they're every bit the believers that their cousins the Christian Fundies are. Probably even more so, since - apart from Frederich Hayek - they have no "Savior" on whom to project their "salvation" wish fulfillment fantasies.
Of course, given Hayek was the lunatic that once pronounced saving money is "hoarding" and money works best in the capital markets, we may well regard him as a fruitcake anyway.
But let's cut to the present. In his excellent Wall Street Journal column 'Avoiding the Austerity Trap' (it's a wonder he still has one giving how many sacred cows of supply side voodoo economics and "free market" bunkum he's gored) Thomas Frank correctly notes that austerity would be a "dreadful trap at the moment, but the urge to blunder burns hotly among the deficit priesthood these days".
And he correctly names Peter G. Peterson as one of the main deficit hawk culprits. Even more of a culprit because this miscreant and hedge fund honcho uses the alarm of massive deficits to conceal his internal yen to gut Social Security and Medicare. As Frank notes (ibid.)
"Once upon a time Mr. Peterson preached a gospel of thrift through books and essays. Since the early 1990s, however, he has built up two foundations to help fight his war on entitlements - the Concord Coalition, and The Peter G. Peterson Foundation. - both of them dedicated to his obsessive vision of fiscal austerity".
Frank goes on to note that their work goes on manifested in "a confusing welter of commissions, studies and public events involving deficit hawks from both parties.". Frank pinpoints one conference in April - the Peter G. Peterson's "Fiscal Summit" - which provided a ready forum for Alan Greenspan (the same guy that wanted to cut Social Security benefits to extend the Bush tax cuts).
Why do we listen to these crazies? Well, because they make their market BS sound so very convincing, much like fundies make their salvation recipe for afterlife insurance sound so plausible (at face value - though when one digs, it collapses).
Is Peterson actually as big a threat as Frank makes him out to be? (And which letter writers to the WSJ subsequently objected to, assuring everyone that Mr. Peterson is an upstanding son of a Greek immigrant who "worked his way up". Maybe - but that doesn't give him carte blanche rights to cut the rug out from others!).
In his excellent book, Batttling Wall street - The JFK Presidency (Sheridan Square Press), Donald Gibson has noted (p. 141) that during the 1992 presidential campaign - when the issue of the destructive nature of speculative market forces arose, one could only find evidence of (economist) Carroll Quigley's historical observations that "dominant economic forces typically do not see the need for (financial) reforms or intervention". Well, why would they, since they would miltiate against their vested interests.
He goes on:
"(Peter) Peterson's complete refusal to address or even acknowledge the financial-corporate establishment's destructive action is an example of this problem. So is Peterson's determination to blame working and middle class Americans for the crisis".
Don't forget that much of that crisis was fomented (as was the 2008 credit meltdown) by financial movers and shakers operating in the shadows, as with the 1989 Savings and Loan Crisis, in which hapless ordinary citizens were screwed out of their savings while the elites were bailed out.
How are the working and middle class to blame? Gibson again, p. 137:
"According to Peterson our current mess began in the 1970s. It is not the interest rates or energy prices he has in mind. Rather, he says that in the 1970s and 1980s there was too much growth in government spending, too much welfare for the middle class and too little saving. Specifically, he says, the country made a mistake when it began protecting middle class entitlement programs in the 1970s."
Note that by "too little saving" he didn't mean in secure FDIC-insured, passbook accounts earning decent interest, but in risky equities that could vaporize at the drop of a hat (as occurred in the market crash of 1987). . In terms of "protecting entitlement programs" he's referring, of course, to the Nixon Administration's passing of the Social Security Cost of Living Allowance, which has made it possible for most seniors to retain a shred of deginity in the face of exploding health care and other costs. But let's examine what the case might have been had no COLA been approved, as Mr. Peterson wished. Assuming a mean inflation rate (deliberately lowballed) of 5% a year starting in 1980, that would have meant a loss in dollar purchasing power of 100% over twenty years.
Applied to my own parents' Social Security - which came to just over $2000 a month in 2000, that would have meant under Peterson's rubric they'd barely have received $1,000, or half their actual amount per month. My dad would likely have had to have worked much longer, even in poor health, and my mom might have had to sell all her belongings. Their medical costs would have kept going up and ultimately, they'd never have been able to pay off their mortgage as they did in 2002.
So, in other words, what Peterson and his monied ilk are after is indentured servitude for the middle class. And why not? Historically, we know that when the middle classes are economically undermined they lose political interest in the overriding priority for work and survival. This way Fascism marches in.
In any case, all Peterson's claims have been roundly dismantled, e.g. in Jacob S. Hacker's book, 'The Great Risk Shift' (Oxford University Press, 2008). As he points out (p. 5-6):
"Over the last generation, we have witnessed a massive transfer of economic risk from broad structures of insurance, including those sponsored by the corporate sector as well as government, onto the fragile balance sheets of American families. This transformation, which I call 'the Great Risk Shift' is the defining feature of the American economy.."
And indeed, one only has to remove his or her blinders and see what's transpired. For those of us who lived through the properous post -War years from 1948-1960, the difference is as glaring as night and day! While in the 1950s a family could get by with one earner, today that's all but impossible. While in the 50s families could safely save their money in bank accounts bearing 5-6% interest, today they must settle for barely 0.5% if lucky. (Thanks to the Federal Reserve and its easy money low interest policy). Or, they can chase yield in risky stock and bond market investments. And we've seen what that's done to 401k's with the result that.....people have to work longer to make up their losses (The Peterson Principle again!)
Hacker, in his exposition, tallies other major losses (risk shifts) in the intervening years, all of which appear to have fallen off of the austerity hawks' radars:
- Loss of stable middle class income and benefits
- Loss of a guaranteed pension (replaced by the do it yourself 401k)
- Loss of good health insurance, or affordable health care
- Exploding home prices: median cost of a home in 1963 was $33,000, now over $200,000
Is it any wonder grown kids have to move back in with their parents following college graduation, given this?
Don't let anyone fool you. The deficit hawks are not just after saving our federal balance sheet. If they were they'd push for immediate shutting down of the Iraq and Afghan occupations, which are bleeding off over $150 billion a year. All going to Chinese bankers, who happily buy T-bonds to support our debt.
The real objective or target of those like Peterson is to finally kill Social Security and Medicare, and let people who depend on both catch as catch can. Or not. This has been their wet dream since FDR authored social insurance in 1935, as noted by author Michael Hiltzik in his The Plot To Kill Social Security.
This is also why Deficit "commissioner" Alan Simpson is full of it when he asserts the commission only wants to stabilize it, not cut it. The easy solution, which none of these hawks want, is simply to raise the FICA level past $250,000. That is no chip off the block of the rich, and it would show the world that Americans - the rich ones- have a sense of the commonweal.
Ad for Peterson, the best bet is to ignore him, his screeds, and his phony commissions. As for Obama, he should have known better than to implement such a fiasco from the beginning. Hayek must be dancing from under his grave.
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