Are Most Economists, Policy Makers and Politicians Just Liars? (Well-Meaning, To Be Sure, But Still)

We knew pretty much that Goldman Sachs, Bank of America and Morgan Stanley - or was it J.P. Morgan Chase? - I can't remember who's who anymore - (among lesser players) were the hands-down winners of our latest economic blackmail adventure; some interesting (is this still controversial?) economic commentary is found at The Baseline Scenario on the sellout at the G20 meeting:

I think most economists, policy makers and politicians are a bunch of liars. The US economy is a Ponzi scheme anyway. Our GDP is inflated by 20 to 30%.

Michel Chossudovsky, Professor of Economics (imagine that) and author of The Globalisation of Poverty, has the best insight that I've heard. Don't miss his essay at the Center for Research on Globalization. You can think of this as unconscionable hysterics on his part or the canary in the coal mine that's trying to give you a heads-up before it's too late.

Guns and Butter, KPFA The administration's 2010 budget will entail the most drastic curtailment in public spending in American history, leading to social havoc and the potential impoverishment of millions of people. Defense spending and bank bailouts will consume all government revenue resulting in fiscal collapse that will lead to the privatization of the state. America's Fiscal Collapse "Strong economic medicine" with a "human face" “Promise amid peril.” The stated priorities of the Obama economic package are health, education, renewable energy, investment in infrastructure and transportation. "Quality education" is at the forefront. Obama has also promised to "make health care more affordable and accessible", for every American. At first sight, the budget proposal has all the appearances of an expansionary program, a demand oriented "Second New Deal" geared towards creating employment, rebuilding shattered social programs and reviving the real economy. The realities are otherwise. Obama's promise is based on a mammoth austerity program. The entire fiscal structure is shattered, turned upside down. To reach these stated objectives, a significant hike in public spending on social programs (health, education, housing, social security) would be required as well as the implementation of a large scale public investment program. Major shifts in the composition of public expenditure would also be required: i.e. a move out of a war economy, requiring a movement out of military related spending in favour of civilian programs. In actuality, what we are dealing with is the most drastic curtailment in public spending in American history, leading to social havoc and the potential impoverishment of millions of people. The Obama promise largely serves the interests of Wall Street, the defence contractors and the oil conglomerates. In turn, the Bush-Obama bank "bailouts" are leading America into a spiralling public debt crisis. The economic and social dislocations are potentially devastating. Obama's budget submitted to Congress on February 26, 2009 envisages outlays for the 2010 fiscal year (commencing October 1st 2009) of $3.94 trillion, an increase of 32 percent. Total government revenues for the 2010 fiscal year, according to preliminary estimates by the Bureau of Budget, are of the order of $2.381 trillion. The predicted budget deficit (according to the president's speech) is of the order of $1.75 trillion, almost 12 percent of the U.S. Gross Domestic Product.

From Mother Jones we get some inside(?) information (emphasis marks were inserted - Ed.):

Watchdog to Fed, Treasury: Where's AIG's Money Going? Nick Baumann March 13, 2009 The reason that taxpayers have had to prop up AIG to the tune of $173 billion is that AIG is now basically a conduit — it owes money to so many other companies that the cash just pours right through. If AIG doesn't pay its counterparties — the entities on other end of its bad bets on the subprime mortgage market, the counterparties might go belly-up, too. That's why the bailout of AIG is sometimes referred to as a "backdoor bailout" for other companies. The people and companies on the receiving end of the "backdoor bailout" are AIG's counterparties, and so far, the Treasury and the Fed have been keeping their names secret. Now the Project on Government Oversight (POGO) is trying to change that. On Thursday, Danielle Brian, POGO's executive director, wrote to Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke warning that "the government's unprecedented effort to rescue the American International Group (AIG) from collapse has been marred by a lack of disclosure and a troubling appearance of favoritism toward Goldman Sachs, one of AIG's most prominent counterparties." Former Treasury Secretary Henry Paulson was Goldman's CEO. The department's assistant secretary in charge of the bailout, Neil Kashkari, and chief of staff, Mark Patterson, among others, are also former Goldman employees. "By withholding crucial details about Goldman Sachs and the other counterparties to AIG, you have given the public ample reason to question the integrity of the government's decisions related to the bailout," Brian wrote.

So, how's your Goldman stock holding up today? Time to buy again? (I hear they are buying GM.) And is this drop in the market really a sideshow? (Need louder music.) Suzan (And where is the American left while all this hell is breaking loose? Yes, I already saw the awesome MoveOn ad.) _______________________