Wednesday, July 16, 2014

Cui Bono from Next (and Last) Wall Street Drop (Stock-man To Rescue?) Rahmbo In Voters' Sights? (Rich Keep the Game Rigged While Americans Cling To Hope of Winning Lottery) Oliver Calls Dim Tune (All Old White Men:  Jaysus! Are We Gonna Get NO Respite Any Time Soon? Russia and China Say No)


Andrew Ross Sorkin helps awful company’s CEO justify skipping out on taxes . . . Wall Street's favorite NYT reporter helps a tax-dodging company's CEO somehow come across as the victim

I was poor, but a GOP die-hard: How I finally left the politics of shame . . . I hated government - even as it was the only thing trying to save me. Here's how, one day, I finally saw the light . . . I felt my own poverty was a moral failure. To support my feelings of inadequacy, every move I made only pushed me deeper into poverty. . . . To make up for my own failures, I voted to give rich people tax cuts, because somewhere deep inside, I knew they were better than me. They earned it. My support for conservative politics was atonement for the original sin of being white trash. . . . I sent money to the Rand Paul campaign. Immediately the Tea Party-led Congress pushed drastic cuts in government spending that prolonged the economic pain. The jobs crisis in my own city was exacerbated by the needless gutting of government employment. The people who crashed the economy — bankers and business people — screamed about government spending and exploited Tea Party outrage to get their own taxes lowered. Just months after the Tea Party victory, I realized my mistake, but I could only watch as the people I supported inflicted massive, unnecessary pain on the economy through government shutdowns, spending cuts and gleeful cruelty. . . . I’m angry at my younger self, not for being poor, but for supporting politicians who would have kept me poor if they were able. . . . Government often fails because the moneyed interests don’t want it to succeed. They hate government and most especially activist government (aka government that does something useful). Their hatred for government is really disdain for Americans, except as consumers or underpaid labor. . . . Sadly, it took me years — decades — to see the illogic of supporting people who disdain me. . . . Rich people vote their self-interest in every single election. Why don’t poor people?

In how many different ways can you say that if you don't build things (products and businesses that sell concrete products) in this country, but instead just build ways in which all your products are just financializations (ideas of gains from ephemeral products) that one day the bubble/crash will wipe your entire country out?

Although those at the top of the financialization empire will always get out in time.

And with your money.

What economic surprises are they planning for us next?

Yes, shiny baubles still mesmerize. Even when they are just glittering off the very white teeth of the well-known, suspectly-employed money changers.

Every time I see a David Stockman article being given national play (at papers/magazines of high caliber) I first wonder, do they remember his very obvious, incrediby well-timed political lies which provided the initial impetus for the minutely-planned economic long-term cataclysme beginning under Ronnie Raygun's tender (and credulous) ministrations?

These guys (the same guys, actually) are not going to be tender in the future either.


No matter the crocodile tears they'll evince for the little guys.

And this gobbledygook is very impressive (calling out "bubble blind," "monetary politburo," "stock markets have become dangerous casinos" with gleeful condemnation).


Or is it just the Yellen bee up their bonnet?

Stay tuned.

(Although it's good to remember that these are the guys who helped set this up and always get out first.)

And hold on to your hat.

The Implosion Is Near:  Signs Of The Bubble’s Last Days

By David Stockman, July 14, 2014
Stockman's Corner

The central banks of the world are massively and insouciantly pursuing financial instability. That’s the inherent result of the 68 straight months of zero money market rates that have been forced into the global financial system by the Fed and its confederates at the BOJ, ECB and BOE. ZIRP fuels endless carry trades and the harvesting of every manner of profit spread between negligible “funding” costs and positive yields and returns on a wide spectrum of risk assets.

Moreover, this central bank sponsored regime of ZIRP and money market pegging contains a built-in accelerator. As carry trade speculators drive asset prices steadily higher and fixed income spreads steadily thinner —  fear and short interest is driven out of the casino, making buying on the dips ever more profitable and less risky. Indeed, the explicit promise by central banks that the money market rate will remain frozen for the duration and that ample warning of any change in rate policy will be “transparently” announced is the single worst policy imaginable from the point of view of financial stability. It means that the speculator’s worst nightmare — suddenly going “upside down” due to a sharp spike in funding costs — is eliminated by central bank writ.
Stated differently, ZIRP systematically dismantles the market’s natural stability mechanisms. One natural deterrent to excessive financial gambling, for example, is the cost of hedging a speculator’s portfolio of “risk assets” against a broad market plunge. In an honest market environment, hedging costs consume a high share of profits, thereby sharply limiting risk appetites and the amount of capital attracted to speculative trading.
By contrast, an extended regime of ZIRP, coupled with the central banks’ perceived “put” under risk assets, drives the cost of “downside insurance” to negligible levels because S&P 500 put writers are emboldened and subsidized to pick up nickels (i.e. options premium) in front of a benign central bank steamroller. This ultra-cheap downside insurance, in turn, attracts ever larger inflows of speculative capital to the casino.
This corrosive game has been underway ever since the Greenspan Fed panicked on Black Monday in October 1987 and flooded the stock market with liquidity. It is now such an endemic feature of Wall Street that it is falsely assumed to be the normal order of things. But, then, would anyone have been picking up nickels in front of the Volcker steamroller?
This dynamic is evident in the chart of the S&P 500 since the March 2009 bottom. The dips have gotten shallower and shallower as ZIRP and other pro-risk central bank policies have eroded the market natural defenses against excessive speculation. As (o)f mid-2014, therefore, it can be fairly said that fear and short interest have been extinguished almost entirely. The Wall Street casino has thus become a one-way market that coils dangerously upward, divorced completely from the fundamentals of earnings and cash flow and real world economic conditions and prospects.

The inverse side of this coin is disappearance of volatility in the equity markets. As shown below, the current readings are at all-time lows, even below bottoms reached on the eve of the 2008 financial crisis. Needless to say, this dangerous condition does not appear by happenstance:  it is the inexorable and systematic result of ZIRP and the associated tools of monetary central planning.
But all of this is ignored by the central banks because their Keynesian economic plumbing models contain a fatal flaw. These models purport to capture capitalism at work, but they contain no balance sheets and hardly any proxy for the financial markets which are at the heart of modern capitalist economies. As a result, central banks pursue ZIRP in order to inflate the plumbing system of the macro-economy with more “demand” — and hence more jobs, income, investment and GDP — while ignoring the systematic destruction of financial stability that results from these very same policies.
As a consequence, Keynesian central bankers are bubble-blind. Whereas they monitor immense amounts of “in-coming” high-frequency macro-economic data that is trivial and “noisy” in the extreme, they ignore entirely “in-coming” financial market data that points to monumental troubles just ahead.
At the present time, for example, 40% of all syndicated loans are being taken down by sub-investment grade issuers. This is materially higher than the 2007 peak, and is accompanied by an even more virulent outbreak of “cov-lite” credit terms. Indeed, upwards of 60% of these junk loans have no protection against debt layering and cash stripping by equity holders — notwithstanding their nominal “senior” status in the credit structure. 
The obvious implication, of course, is that the Fed “easy money” is being massively diverted into leveraged gambling and rent stripping by the LBO houses. Three times since 1988 this kind of financial deformation has led to a thundering bust in the junk credit market. Why would monetary central planners, who allegedly watch their so-called “dashboards” like a flock of hawks, think the outcome would be any different this time?

40 Percent of Syndicated Loans Are to Sub-investment Grade Borrowers

The monetary politburo remains unperturbed, of course, because they are not monitoring the composition and quality of credit. Their models simply stipulate that aggregate business loan growth will lead to more spending on capital assets and operational expansion including hiring.
That assumption is manifestly wrong, however, because it is plainly evident that most of the massive expansion of business credit since the last peak has gone into financial engineering — stock buybacks, LBO’s and cash M&A deals — not expansion of productive business assets.
Indeed, total non-financial business credit outstanding has risen from $11 trillion in December 2007 to $13.8 trillion at present, or by 25%, yet real business investment in plants and equipment is still $70 billion or 5% below its pre-crisis peak.

And that is “gross” spending for plant and equipment as recorded in the “I” term of the GDP accounts.  The far more relevant measure with respect to economic health and future growth capacity is “net business investment” after accounting for depreciation and amortization allowances. That is, after accounting for the consumption of capital that occurred in the production of current period GDP. As shown below, that figure in real terms is 20% below the peak achieved two cycles back in the late 1990s.
In short, the combination of faltering investment in real plant and equipment juxtaposed to peak levels of leveraged loan finance should be a warning sign of growing financial instability. Instead, the central bankers bray that valuation multiples are not out of line and financial institution leverage is reasonably well-contained.

Real Business Investment – Click to enlarge
The “valuations are normal” line proffered by Yellen and her band of money printers, however, is simply an adaptation of the Wall Street hockey sticks based on projected earnings ex-items – which is to say, “earnings” estimates that omitted on average 23% of actual P&L charges over the course the 2007-2010 boom and bust cycle owing to non-recurring write-downs of goodwill, plants, leases and restructuring costs, among countless other real expenses which ultimately consume corporate cash and capital.
As I demonstrated in “The Great Deformation”, cumulative S&P 500 “earnings less items” over that period amounted to $2.42 trillion compared to GAAP reported earnings — that is, the kind that you don’t go to jail for reporting to the SEC — of $1.87 trillion.
Consequently, the Fed fails to see the in-coming data on financial instability because it isn’t looking for it, and is simply tossing out Wall Street sell-side propaganda as a sop.  The disappearance of volatility in the S&P 500 chart shown at the beginning, for example, is nearly an identical replica of the run-up to the 2007 stock market peak. Yet the appearance of a proven warning sign of a bubble top has been resolutely ignored.

The fact is, PE multiples are far above “normal” based on GAAP earnings in historical context. During the LTM period ending in Q1 2014, S&P 500 earnings amounted to $100 per share after adjustment for a recent change in pension accounting that is not reflected in the historical data. Accordingly, even the big cap “broad” market is trading at 19.6X reported earnings—a level achieved historically only at points when the stock market was on the verge an implosion.
Moreover, today’s $100 per share of earnings are highly artificial owing to massive share buybacks funded by cheap debt and by deep repression of interest carry costs. The S&P 500 companies carry upwards of $3 trillion in debt, but were interest rates to normalize— earnings per share would drop by upwards of $10. Likewise, profit margins are at an all-time high, indicating that the inevitable “mean-regression” will chop additional amounts out of currently reported profits.

In other words, at a point which is month #61 of the current business cycle, and thereby already longer than the average cycle since 1950, why would any one in their right mind say a market which is trading a nearly 20X reported earnings is cheap. Indeed, in a world where interest rate and profit rate normalization must inevitably come, the capitalization rate for current earnings should be well below normal — not extended into the nosebleed section of historical results.

And this applies to almost any other measure of valuation in risk asset markets. The Russell 2000, for example, still stands at the absurd height of 85X reported earnings. The cyclically adjusted S&P stands at 24X, or six turns higher than its half century average. The Tobin’s Q measure is also far more stretched than in 2007.

Likewise, emerging markets have piled on $2 trillion in foreign currency debt since 2008. This makes them far more significant in the global financial scheme than the were in 2008 or even at the time of the East Asia crisis of the late 1990s. And that is not even considering the massive house of cards in China, where credit market debt has soared from $1 trillion at the turn of the century to $25 trillion today.

At the end of the day, the Fed and its fellow traveling central banks have systematically dismantled the natural stability mechanisms of financial markets. Accordingly, financial markets have now become dangerous casinos in which speculative bubbles are guaranteed to build to dangerous extremes as the central bank driven financial inflation gathers force.  That’s where we are now. Again.

So, Chicago voters not as addled as previously ensured?

We should know soon.

When Bob Matsui died at the end of the 2004 cycle, Emanuel was given the DCCC chair, unheard of for someone with no seniority at all. He immediately started recruiting conservatives from the Republican wing of the Democratic Party and succeeded in passing them off as actual Democrats, although almost all of them were exposed and subsequently defeated in 2010, leading directly to the current catastrophic Republican control of Congress.

I've despised the existence of Rahmbo, the fraud, in the Democratic Party from the first.

He was never our candidate. He's an Israeli first and a money-lender/usurer always.

So how did this occur and for so long?

Go figure.

Tuesday, July 15, 2014

Beltway Pundits Are Surprised Chicago Is Rejecting Rahm Emanuel - Normal People Aren't

The Sun-Times mayoral poll shows Rahm Emanuel being decisively beaten by two possible opponents, both progressives. Cook County Board president Toni Preckwinkle would crush him 55.23% to 30.98% and Teachers Union president Karen Lewis is ahead 45.35% to 36.44%. The only demographic group that seems to be able to stomach Emanuel are whites… and Preckwinkle even beats him - 54.83% to 34.01% - among whites. In May we looked at another poll showing that most Chicagoans think Emanuel was a mistake they;re not willing to make twice. That poll showed that "only 29 percent would support him if the mayoral election were held today."

Emanuel's strategy is to go to the wealthy special interests, on whose behalf his entire career has been based, and suck in enough money to scare off potential challengers. He's rapidly approaching $10 million in his campaign war chest - and that's not grassroots money.

The African American voters who got sucked into voting for him last time because of the Obama connection quickly realized they'd been had and are not likely to vote for him again. Clinton and Obama may endorse him again but voters now know first hand what he is and how terrible he is for their families. He's completely alienated African-American voters by instigating Chicago’s first teachers strike in 25 years, closing 50 public schools, opening new charter schools and unveiling plans to build new schools and school additions, with the educational largesse heavily concentrated on the (white) North Side. He's being blame for the rise in crime and for the inept handling of the murder epidemic.

A creature of Wall Street and banksterism, Emanuel is the embodiment of everything that's wrong with the corporate takeover of the Democratic Party and the destruction of the proud party brand. His first mark on the nation was as Clinton's hatchet man in twisting enough Democrats' arms to push through NAFTA, which Democrats had defeated under George H.W. Bush.

Without Emanuel, then a brutish but little-known White House aide, NAFTA would likely have never passed. He and then-GOP Majority Leader Tom DeLay road rough shod over Members who understood how devastating NAFTA would be for their constituents and for the U.S. economy. But Clinton was anxious to deliver for Wall Street - especially to deliver on something Bush had been unable to - and Emanuel was the most bombastic and thuggish operative he had in his arsenal.

Emanuel was personally rewarded by Wall Street with a 2 and a half year make-work position for Wasserman Perella - and on the board of Freddie Mac - where he made $16.2 million. That was a payoff for someone with no finance or investment experience and no MBA and no qualifications for the job whatsoever. (The Freddie Mac appointment from Clinton brought in another half million dollars or so and Emanuel was at the center of a series of scandals involving illegal campaign contributions and shady accounting.) His next gift from the Establishment was a "rotten borough" congressional district that was slated to disappear.

He was elected in 2002 and put on the House Financial Services Committee, the home of Congress' most crooked members, from which the greatest amount of money can be extorted from Wall Street. During his relatively short time on the committee, the financial sector contributed $3,038,023 to Emanuel's re-election campaigns. He was alas able to build power inside the caucus by directing millions of Wall Street dollars to colleagues less willing to sell their souls to Wall Street directly.

When Bob Matsui died at the end of the 2004 cycle, Emanuel was given the DCCC chair, unheard of for someone with no seniority at all. He immediately started recruiting conservatives from the Republican wing of the Democratic Party and succeeded in passing them off as actual Democrats, although almost all of them were exposed and subsequently defeated in 2010, leading directly to the current catastrophic Republican control of Congress. Among the conservative Democrats Emanuel recruited who went on to amass repulsive voting records and were soon defeated, disaffected Democratic base voters refusing to vote for them again:

• Harry Mitchell (AZ) • Tim Mahoney (FL) • Brad Ellsworth (IN) • Baron Hill (IN) • Nancy Boyda (KS) • Mike Arcuri (NY) • Heath Shuler (NC) • Charlie Wilson (OH) • Zack Space (OH) • Jason Altmire (PA) • Chris Carney (PA) • Nick Lampson (TX)
You can fool some of the people some of the time, but… And now it looks like Emanuel himself may well fall victim to his own chicanery and hubris. His goal - running against Mark Kirk when his Senate seat comes up in 2016 - could be seriously imperiled if he's is humiliated in his own reelection bid in Chicago. Blue America will be keeping an eye on this one - and working to do whatever we can to end Emanuel's disastrous career in politics.

Toni says she isn't running, but Karen looks like a good bet

Have you caught John Oliver's act yet?

I saw him on Charlie Rose the other night (and, yes, it's one of the few reasons I still check what old Charlie has scheduled) and his earnestness and integrity shone like a spotlight there.

John Oliver: The Rich Keep the Game Rigged While Americans Cling to False Optimism

July 14, 2014


In an extended segment on HBO’s Last Week Tonight, host John Oliver turned his gaze on income inequality, noting that Americans overwhelmingly believe that the system favors the rich while, at the same time, accepting it, believing they too will somehow be rich someday.

“Our main story tonight, is income inequality.” Oliver began. “A good way to figure out which side of it you’re on, is whether you are currently paying for HBO, or stealing it.”

Noting that President Obama recently delivered a speech where he used the expression ‘income inequality,’ twenty-six times, calling it “the defining issue of our times,” Oliver pointed out that Democrats immediately retreated on the issue in the face of accusations of class warfare.

“So basically, income inequality has become just another topic of conversation we prefer to avoid in America, like Japanese internment camps or that time we gave Roberto Bengini an Academy Award. National tragedies, equally wrong,” he said.
Pointing out that income inequality is not exclusive to America, Oliver explained that it “rising faster here,” with the average income of the richest ten percent now sixteen times as large as the poorest ten percent.
“At this point, the rich are just running up the score,” Oliver said. “If our economy was a Little League game, someone would have called it by now.”

Noting that economic policies that benefit the few at the expense of the many shouldn’t be acceptable to Americans, Oliver attributed acceptance to “America’s greatest quality — optimism.”

“Here’s the key. Sixty percent believe that most people who work hard enough, can make it,” Oliver explained. “Or, in other words, ‘Yup, I can plainly see this game is rigged which is what is going to make so sweet when I win this thing.’”

He continued, “America now has a system where wealth is essentially dispersed as a lottery of birth and maybe the reason we seem to accept that is that, even though we know the odds are stacked against us, we all think we’re going to win the lottery.”

Oliver then showed clips of “experts” appearing on TV giving advice on how to handle future winnings from playing state-based lottery games, including putting them in a trust.

“Absolutely,” Oliver added. “It is never too early to start protecting your imaginary lottery winnings from crippling estate taxes. It’s crazy, you might as well do an eight-minute segment on how to handle being attacked by a shark while scoring the winning touchdown at the Super Bowl. Or things to say on your third date with Beyoncé.”

See the video from Last Week Tonight by clicking on the title link above.
- - - - - - -

Right on schedule.

One hundred years.

And counting?

The subtitle of this next essay could be "Things Your Mainstream Media Will Never Tell You".

Or "Why You've Been So Confused At the Actions of the Clinton, Bush(es), and Obama Administration's Foreign Services".

(Also, "Why Walter Cronkite and Dan Rather Were Gleefully Replaced With Blithering Blondes").

Jul 12, 2014

The American Century Is Over: How Our Country Went Down in a Blaze of Shame

We face a triple crisis in foreign policy, economics and democracy. Here's how it all went to hell.

(Click on photo for full nauseating effect.)

The American Century is over: How our country went down in a blaze of shame

Donald Rumsfeld, Jamie Dimon, David Koch (Credit: AP/Rob Carr/Reuters/Keith Bedford/AP/Phelan M. Ebenhack/Photo montage by Salon)

In 1914, the American Century began. This year the American Century ended. America’s foreign policy is in a state of collapse, America’s economy doesn’t work well, and American democracy is broken. The days when other countries looked to the U.S. as a successful model of foreign policy prudence, democratic capitalism and liberal democracy may be over. The American Century, 1914-2014. RIP.

A hundred years ago, World War I marked the emergence of the U.S. as the dominant world power. Already by the late nineteenth century, the U.S. had the world’s biggest economy. But it took the First World War to catalyze the emergence of the U.S. as the most important player in geopolitics. The U.S. tipped the balance against Imperial Germany, first by loans to its enemies after 1914 and then by entering the war directly in 1917.

Twice more in the twentieth century the U.S. intervened to prevent a hostile power from dominating Europe and the world, in World War II and the Cold War. Following the end of the Cold War, America’s bipartisan elite undertook the project of creating permanent American global hegemony.
The basis of America’s hegemonic project was a bargain with the two major powers of Europe, Germany and Russia, and the two major powers of Asia, Japan and China. The U.S. proposed to make Russia and China perpetual military protectorates, as it had already done during the Cold War with Germany and Japan. In return, the U.S. would keep its markets open to their exports and look after their international security interests.

This vision of a solitary American globocop policing the world on behalf of other great powers that voluntarily abandon militarism for trade has been shared by the Clinton, Bush 43 and Obama administrations. But by 2014 the post-Cold War grand strategy of the United States had collapsed.
China and Russia have rudely declined America’s offer to make them subservient military satellites, like Japan and Germany. China has been building up its military, engaging in cyber-attacks on the U.S., and intimidating its neighbors, to promote the end of American military primacy in East Asia.
Meanwhile, Russia has responded to the expansion of the U.S.-led NATO alliance to its borders by going to war with Georgia in 2008 to deter Georgian membership in NATO and then, in 2014, seizing Crimea from Ukraine, after Washington promoted a rebellion against the pro-Russian Ukrainian president.

There are even signs of a Sino-Russian alliance against the U.S. The prospect excites some neoconservatives and neoliberal hawks, who had been quiet following the American military disasters in Iraq and Afghanistan. But in a second Cold War against a Sino-Russian axis, the European Union, with its economy comparable to America’s, will not provide reliable support.

Russia is a nuisance, not a threat to Europe. China doesn’t threaten Europe and Europeans want Chinese trade and investment too much. In Asia, only a fool would bet on the ability of a ramshackle alliance of the U.S., Japan, the Philippines, Vietnam and Australia to “contain” China.
The U.S. still has by far the world’s most powerful and sophisticated military — but what good is it? Russia knows the U.S. won’t go to war over Ukraine. China knows the U.S. won’t go to war over this or that reef or island in the South China Sea. As Chairman Mao would have said, America is a paper tiger.

The U.S. military was able to destroy the autocratic governments of Afghanistan, Iraq and Libya — but all the foreign policy agencies of the U.S. have been unable to help create functioning states to replace them. Since 2003, Uncle Sam has learned that it is easier to kick over anthills than to build them.

In addition to having a huge military that for the most part can neither intimidate strong adversaries nor pacify weak ones, America has an economy that for decades has failed to deliver sustained growth that is widely shared.

Apart from a revival of oil and gas production in the U.S., the economy’s main area of comparative strength has been technological innovation
. The rise of self-driving vehicles and the “internet of things” are promising developments. But these mostly involve the extension of existing information technology to new sectors.
The American tech economy has been living on intellectual capital accumulated before the 1980s, when the Defense Department funded the early breakthroughs in information technology.

Compared to earlier breakthroughs like transistors and satellites, most of today’s innovations are trivial and contribute little or nothing either to living standards or national industrial power: “Hey, give me a billion dollars for my app that tells you when to pick up your laundry!”

The picture is even bleaker when we turn our gaze from Silicon Valley to the rest of the American economy. The manufacturing sector has been decimated by subsidized imports from China, Japan and other mercantilist countries, and by the decisions of many American multinationals to shut down American factories in order to exploit cheap labor and take government subsidies in other lands.
America’s infrastructure is decrepit, but Congress cannot even agree about how to fund the aging interstate highway system, much less invest in twenty-first century transportation and communications systems. Most of the jobs being created in the U.S. are in the low-wage, non-union, no-benefit service sector where millions are trapped in the status of the “working poor.”

Among the biggest beneficiaries of the current American economic system are not entrepreneurs or innovators, but parasites who owe their wealth to rigged markets or government subsidies. The “parasite load” in the U.S. economy includes many in the financial industry who expect that the federal government will socialize their losses but let them keep their profits — profits taxed at low rates, or hidden from taxation altogether.
Other parasitic special interests include the predatory monopolies of America’s health care sector — the pharma industry, which charges Americans far more for the same drugs than it is allowed to charge in Canada, Europe or Asia; physicians, who tend to be paid much more in the U.S. than in other countries with comparable health outcomes; and price-gouging hospitals. Much of America’s higher education industry, too, is riddled with parasites, including bankers who profit from lifelong debt serfdom by Americans who take out student loans and empire-building university administrators who fund personal entourages with public and private money.

Suppose a delegation from a developing country were to visit various First World nations in search of models. What on earth could the U.S. teach them? How to enrich bankers who add little or no value to the economy? How to ensure that citizens pay far more for medical goods and services that cost much less everywhere else? How to make citizens go into debt to get an education? How to import multitudes of poor foreign workers to compete with native workers, even though the country is suffering from massive and persistent underemployment? How to allow many employers to pay wages so low that workers are forced to use public welfare services to survive?

All right, let it be stipulated that the world’s greatest military hasn’t been very successful either at intimidating other great powers like China and Russia or frightening warlords in Mad Max wastelands into obedience. And let’s concede that any country that chose the post-1980s U.S. economic system as its model would be certifiably suicidal. Aren’t we still the world’s greatest liberal democracy?

The U.S. remains a paragon of liberalism and democracy compared to many foreign dictatorships and anarchies, of course. But the proper comparison is with other advanced industrial democracies. By that test, current American democracy offers little for Americans to take pride in.
Personal freedom? These days, Europeans insist on far more protections for individual privacy against government surveillance or corporate exploitation of our data than we Americans have been.

While most civilized countries long ago abolished the death penalty, the U.S. has recently been among the world’s leaders in executions, surpassed only by Iraq, Saudi Arabia, Iran and China. For the most part, we allegedly freedom-loving Americans can’t be bothered to protest government data mining, corporate data mining and the occasional mistaken execution of innocent Americans by bungling state governments.

Elections? The U.S. still uses the unfair British colonial era plurality voting system, long jettisoned by most modern democracies in favor of alternatives like proportional representation. Partisan state legislatures cynically gerrymander districts to favor the party in power in the state capital.

Having been captured by the neo-Confederate White Right, the Republican Party in one state after another is trying to change voting laws to minimize voting by disproportionately black and Latino low-income voters. And politicians of both parties have to grovel and scrape before a small number of billionaires, in order to win in the “money primary” that weeds out politicians who can’t find some hedge fund manager or casino owner to bankroll them.

I do not mean to imply that other societies are doing much better than the U.S. at the moment. The European Union is suffering from a self-inflicted austerity policy disaster, China under its kleptocratic Communist Party is facing slowing growth and popular discontent, and so on. The end of the American Century won’t be followed by the Chinese Century or the European Century. The emergence of a multipolar world means it won’t be anybody’s century.

With two lost wars in a decade, a stalled economy choked by parasitic lobbies and a political system dominated by billionaires, you would think there would be a sense of crisis in America. But neither party is willing to acknowledge the severity of our problems, much less contemplate the radical structural changes that are necessary to address them.

Those on the right who denounce “crony capitalism” perversely tend to focus on government aid to a productive industry like the Export-Import Bank, while averting their gaze from the most egregious examples of economic parasitism — finance-industry predators and the predatory medical-industrial complex. For their part, neoconservatives are in complete denial about the limits to American power illustrated by the debacles in Iraq, Afghanistan, Libya and, earlier, Vietnam. (To be sure, we did defeat Grenada and Panama).

The mainstream Clinton-Obama Democrats, whose politics is a legacy of the booming 1990s, are also unable to acknowledge how bad things really are.

Admitting that American foreign and domestic policies for decades have almost completely failed to achieve their stated goals would tend to cast doubt on the record of the two Democrats, Bill Clinton and Barack Obama, who have occupied the White House for four of the six presidential terms since the 1992 election.

Instead, many mainstream Democrats would have us believe that all that is needed to fix essentially sound foreign and domestic policies is a Democratic congressional supermajority and a few tweaks — a bit more multilateralism and foreign burden-sharing in foreign policy, slightly bigger subsidies for low-income households at home.

The U.S. is facing a triple crisis — a crisis of foreign policy, a crisis of economics and a crisis of democracy. The American republic has renewed and rebuilt itself during even greater crises in the past, and can do so again. But the first step is to drop the happy talk and chest-thumping and flag-waving and be honest with ourselves about the severity of the problems confronting us.

Michael Lind is the author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation. 

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