It’s Time to Rethink the Banking Industry

As another nation, Ireland, now peers into the abyss of economic chaos, once again governments are being called upon to bail out the banking industry. Does this sound vaguely familiar? Of course it does . We have been hearing this tune for the past couple of years, perhaps the most loudly in the U.S. where those bastions of our economy like Goldman Sachs, Bank of America, and many more were once facing oblivion and financial Hell. A fate, perhaps, well deserved – but avoided by the intercession of our government. This act of semi-divine intercession is about to be repeated in Europe as that which must not come to pass is prevented from coming to pass.

Of course, I am referring to the collapse of the banking industry in Ireland. The current Irish government, similar in philosophy to the Bush/Cheney Republicans of the U.S., enjoyed the ride while they could. The run up in housing prices, the run up in wages, the run up in credit. It was all a bubble, no different from America’s bubble and equally unrecognized by the Republican economic philosophers at the time. Everyone thought it could go on for ever, except for a few economists. America had its Cassandra economist, Roubini.  Ireland had its Cassandra, McWilliams. Both were right. They called the collapse long in advance, but neither government will admit it, and neither will seek the advice of these bright economists to this day.  Why? We can only wonder.

Here’s another “why”. Why did the U.S. government feel the need to bail out the banks and why does the European Union feel the same? Does anyone know how to spell oligarchy? We are led to believe that the banks are the sine qua non of our economy. The loss of our banks would spell doom for civilization as we know it. Really? Just the banks, I suppose.  Oh no,wait. General Motors too. We couldn’t live without them either. But what about the thousands of individuals who lost their homes? What about the millions who are out of work? Do we not need them also? Apparently not. At least not with the same sense of urgency as the banks.

So let’s take a look at the banks. What, in essence, do they actually do? Well, at their core, they are a source of money. They make loans that people and businesses need in order to carry on their lives. But how does that work, you say? Here’s an example. Suppose old J.P. Morgan had a lot of money (which he did) and he decided to use that money to open a bank (which he did). You go into his bank and you borrow $1,000. Great! Now you only have to pay it back in easy installments of $49.99 for a period of about twenty – two months. Twenty-two? Wait, shouldn’t it be about twenty? Ah, we’re forgetting the interest of about $100, aren’t we? See, you borrow $1,000 but you have to pay old J.P. back $1,100. That’s how he makes money. As Ebenezer Scrooge said, “It’s business.”

But, here’s where the magic comes in: After you pay back old J.P. his money plus interest, he pockets his profit and then what does he do? He loans out that same $1,000 again! Yes! Isn’t that amazing? J.P. can loan out the same money over and over again and make money each time he does so, and his $1,000 never wears out! The best thing for old J.P. is that he doesn’t have to do any work to make money. He doesn’t produce a product, he doesn’t farm any land, he doesn’t build anything, he doesn’t even sell anything. Being a banker has to be just about the best job in the world because you don’t have to work to make money! Even better, bankers make more money than anybody and if they screw up and made stupid loans where they don’t get paid back, the government gives them all the money they lost so they can start lending all over again.

Now imagine you were a banker – like those Payday loan guys. You could loan out money  at $300% interest and get it back in a week! Or, what about if you were a different kind of banker – a credit card banker? You could loan money at 30% interest and it would take years and years for people to pay you back – maybe even a lifetime. Of course you would get your principal back pretty soon, but the poor credit card holder will be paying interest for a semi-eternity. But that is the beauty of the system – you can then loan out the original amount over and over again! And you don’t have to take risks like building televisions or cars that might not sell, or refrigerators that might be defective and people want their money back. No, banking is the ideal business for making tons of money – and the best thing of all is that our governments won’t let you fail! Who could want anything more?

How about the American people? Wouldn’t we want something more, something different? One might think so, but I don’t hear a lot of people complaining about our banking system. I guess that’s because if we change anything it would make us communist or something even worse – just like with health care, and public schools. Still, I have to wonder…why can’t our government run the entire banking system like a utility?  Do we really need privately owned banks that produce no tangible product and charge the highest interest rates possible? Why can’t we just get loans from a government bank at 0% interest? Why not? It would be our money anyway – you know: our tax money. Isn’t that a good use for our tax dollars? If the government, via the Federal Reserve, can print all the money it wants and then give it to the banks at extremely low interest rates, why can’t the government do the same thing for the citizens and eliminate the middlemen bankers who bleed us and our economy while doing no productive work at all? Is it really so un-American to even think about a redo for America’s banking system? Think about it….

Why wouldn’t it work?

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China’s Success: The Triumph of Communism?

For America’s capitalists, it is the 800 pound, unacknowledged gorilla in the room.  China has the most successful economy in the world today. Despite the current worldwide economic meltdown that has caused the worst recession in America since the Great Depression, China has not had a recession.  The great engine of the Chinese economy has chugged along, continually churning out the goods that we have all come to rely on for our everyday needs – now that, it seems, almost nothing is made in America anymore. So, does this mean that Communism is superior to Capitalism? (I can almost hear John McCain and Sarah Palin choking at the very thought – not to mention the entire Republican Party. How can we even ask the question, they would say.  Isn’t it unAmerican to even ask questions like that?  I’m sure it is in Sarah Palin’s world.)

The question, however, is a valid one. What is going on here?  If capitalism is such a great economic system and communism is such a vile system why is China on top and not the U.S.?  In case you missed it, because the U.S. press tends to ignore economic successes in China, it was announced yesterday that China now has the world’s fastest high speed train. It travels at 380 km/hour (236 mph). Even more notable, China plans to build 42 more high speed rail lines in the next three years, covering 13,000 kilometers of track (about 8,000 miles).

If that isn’t enough, consider this: China is the world leader in Green technology. Even as President Obama is talking about starting a green tech initiative, and even while he is hoping to recharge our economy by major investments in green tech, China is the world’s largest producer of wind turbines, and it is also the world’s largest market for generating power from the wind.  It has 10 gigawatts of newly installed wind power generation capacity. So how much wind power generation capacity does the U.S. have? About 1/10 of China’s capacity – not much more than a gigawatt.

China is what the U.S. was.  China is the merchant to the world these days. China is the banker to the world too.  China has demonstrated capabilities in space that rival the U.S. Apollo program.  China recently hosted the Olympic games and put on a show that amazed the world.  So – do all of these accomplishments mean that communism is a superior economic system compared to capitalism? Not necessarily.  Consider for a moment a much smaller country that also made major economic advances in the past – a country that is primarily Chinese, yet is far from being a communist country. I am referring to Singapore. As small as China is large, Singapore was once a part of Malaysia. An island state, and now an island nation, Singapore was not much more than a port city – a stopover for merchant ships plying the far east trade routes. However, that all changed with the election of former Prime Minister Lee Kuan Yew.  Lee took control of Singapore and it’s economy.  Far from being a communist, Lee was a capitalist – except that he believed in planning. For Lee, uncontrolled capitalism made no sense. Under his guidance, Singapore’s economy flourished.  Singapore is now a major hub for international finance, technology, and tourism. Lee Kuan Yew implemented a carefully drawn plan for economic growth – a plan that included strict controls on business practices (as well as lifestyles).

The lesson that can be drawn from Singapore and China then is not that communism is superior to capitalism, or that capitalism is superior to communism when we are talking about economic systems. Both can produce good results and both can produce disasters. The key to success for both China and Singapore has been intelligent, responsible government.  It doesn’t take a lot of thought to realize that intelligent design will always succeed over random chaos.  Darwinian economics of the sort advocated by the most right-wing of politicians – every man for himself and let the government just stay out of the way – is a recipe for economic disaster and chaos.  The Neanderthal economic doctrines of Bush/Cheney of  “just let ‘er rip” led to the greatest financial disaster in eighty years.  The lesson we need to learn is that non-functioning, or dysfunctional governments inevitably lead to disaster.  Intelligent, thoughtful, responsible governments lead to success.  The key is not whether the government is communist or capitalist, the key is whether the people who are in charge have intelligence, integrity, and compassion for the people of the country – all of which qualities were lacking in the Bush years.

We are not out of the woods yet. Just one look at Congress shows the problem we face. Obstructionist Republicans in Congress use every trick that can think of to stymie legislation on almost any topic – except war – they like war.  Health care reform that might bring America into the civilized world of the 21st Century is held up so that the Republican cronies in the insurance industry can continue to feed off the people. Never mind that so many people suffer and die without health insurance. Anything for a buck.  Obstructionist Republicans create a situation where almost nothing can get done in Congress and the country is unable to move forward on any major initiatives whether they are related to health or the economy. That is the principle difference between China and America.

Once upon a time we had people in Congress that honestly worked for the “good of the country”. Today, the “good of the country” is a joke. It’s not about the country, it’s about power and control and money in your pocket from whichever lobbyist has the most.  China is our largest creditor. China is our major supplier of consumer goods.  China is growing while we are stagnant.  The reason for this is not the “isms” of economic systems; the reason is intelligence and integrity in government – both of which have been in short supply in our nation’s government for far too long.

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The Coagulation of Wealth – Is It a Christian Value?

I suppose it might be difficult for some members of the extreme right wing to accept, but God did not invent Capitalism.  Another fact, equally hard to accept for the extreme right wing is that Jesus did not condemn Communism.  I know.  It’s hard to believe. After all, if Jesus was alive today, wouldn’t he be a Capitalist?

Of course there is the difficulty of some of the things Jesus is quoted as saying.  I am referring to expressions like, “It is easier for a camel to go through the eye of a needle than it is for a rich man to enter the Kingdom of Heaven”. Or, “Sell all you have and follow me.”  I wish I could find a Republican extreme right wing Christian who could explain these discrepancies to me, because I just can’t figure it out. And, since the Christian right wing seems to be exclusively Republican, I figure they must know the truth about this.  Please feel free to explain this to me.

Meanwhile, I’ve been wondering.  Have you noticed in our Capitalist economic system, where everybody supposedly has an equal chance to be a millionaire, how it seems sort of like the system is sort of rigged in favor of the people who already have a lot of money?  For example, take a look at our laws on taxing estates – that’s what is left over when you die.  Under the administration of President Bush the tax on estates of less than $3.5 million was reduced to zero. Yes, zero dollars.  The wealthy can pass on their gains to their heirs and pay absolutely no tax on anything under three and a half million dollars.

What about income tax?  Surely the wealthy pay their fair share there, don’t they? Well, under President Bush’s “tax cuts” the tax on the wealthiest Americans dropped by almost 40% while the tax on the poorest Americans dropped less than 1%. Our American tax system favors the wealthy. Why? Well, for one thing who do you think writes the tax code? It surely isn’t the poor people. Senator Kerry is the richest man in the Senate, worth close to a billion dollars.  A lot of the Senators are worth many, many millions of dollars. Overall the median (not the average) net worth of U.S. Senators was $1,700,000 in 2007. For Congressmen it was $684,000.

President Obama has talked in the past about restoring the tax rates to be the same as they were under President Clinton.  At that time the wealthy paid a larger share of the country’s tax burden.  However, since his election there hasn’t been much talk about tax reform, even though one might think that recirculating some of that tax money might help to stimulate the economy.  I get the impression that Congress is not too eager to vote for a tax increase on their own pay. So the money of the wealthy just continues to sort of clot up in their bank accounts.

Here’s something to consider: the bonuses for the bankers on Wall Street are growing astronomically while everyone else’s salary is just sort of keeping up with inflation. Goldman Sachs employees will receive bonuses of about $700,000 apiece this year. How fortunate for them!  And even more so because of George Bush’s tax cuts:  they will have to pay very little tax on their bonuses. Aren’t you glad for them?

Meanwhile, average Americans are continuing to lose their homes to foreclosure.  Millions are out of work and can’t find a job.  One can only ask one question: is this right? I don’t mean in a legal sense – of course it’s legally right – the laws of our country have enabled this. The question is this: in a moral sense, is it right? The thing I find it hard to understand is how the “Christian” right – those diehard Republicans who claim to be true Christians and just love the George Bush style of government – reconcile this with the teachings of Jesus. Are we reading the same Bible here?

It’s a simple question. Are the Capitalist values of America and the resulting coagulation of wealth for a very small number of people in America, at the expense of the vast majority of people, compatible with the teachings of Jesus? A simple yes or no will do, but if anyone can explain how they truly are compatible I would love to hear the explanation.

And here’s a second question for the Republican “Christian” right: if you cannot answer my first question then why do you call yourselves Christians?  I would love to hear that answer too.

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Is Labor Day A Communist Holiday?

There was a time when Americans could agree to disagree.  There was a time when rational debate was possible, when one side would listen to the other and would then respond with their criticisms and their own point of view.  No more.  With the election of Barack Obama to the Presidency, Change has occurred – but not the Change we were expecting.  This Change has come from the “right” – the extreme “right”, which sadly now seems to include most of the Republican Party.  It seems the Change to the Republican Party took place almost overnight.  Leaderless after the McCain/Palin combo failed to win the election, the flailing Party faithful looked for new inspiration.  They looked for other voices to lead them, and they found people like Rush Limbaugh and Glenn Beck, people of dubious intellectual ability, to provide a new vision for the Party. And a Hellish vision it is.

Remember the Town Hall meetings of the summer?  Remember how free speech was throttled by a well organized gang of “American”  thugs who refused to hear or discuss any plans for health care reform? Their only plan was to prevent the exercise of free speech and an intelligent discussion of the issues.  Now, the new Republican Party, a faint shadow of its former self – no longer recognizable as an American institution, but rather an instrument that strives to stifle public discussion and prevent the free expression of opinions, has sunk to a new low.  It’s members are now shrieking about President Obama’s planned speech to the school children of America. In doing so they have forever demeaned the office of the Presidency, and they have done so without reason nor regard for our values of freedom of expression and our culture of holding the office of the President of the United States in high regard.

Today, the President will release the text of his speech in advance in order to prove to the Republican Gestapo that his message is not political but is instead intended to simply encourage children remain in school and do well.  But the damage has been done, not only to the reputation and culture of the United States, but also to the reputation of the Republican Party.  This formerly legitimate political party has descended into some sort of imbecilic Hell, a morass of rotting ideas and lunatic leaders.  More and more they have concentrated their appeals to the lunatic fringe of America – people who refuse to believe that Barack Obama was born in the United States, people who have stocked up on guns and ammunition in the insane (and dangerous) belief that President Obama plans to somehow restrict this right. These are people who are unable to debate an issue intelligently, and thus would rather drown out the opposition with screams and shrieks and rants. Anything to prevent free speech.

Today is Labor Day in the United States.  So where is Glenn Beck?  Shouldn’t he be ranting insanely about how this holiday – Labor Day – celebrates unions and labor? Surely, if  he can connect the dots, in what serves as his brain, and determine that President Obama is either a Socialist or a Communist, shouldn’t he also determine that our Labor Day holiday places us in solidarity with worldwide Socialism and Communism? Shouldn’t the Fox television network be staging a day-long campaign to ban this un-American holiday?  Shouldn’t people who take Labor Day as a day off from work be investigated for their obvious Communist sympathies?  How did Glenn and Rush miss this? Or could it be that noting this close association between an American holiday and the united workers and unions around the world doesn’t suit their propaganda campaigns against the President?

The Republican Party, and its mouthpieces and minions, have taken a desperate path.  They have taken the path of denial of free speech and the deliberate distortion of truth  – all to gain political advantage. They have done so at the expense of our Constitution and our Freedom of Speech, and now they have done so at the expense of the dignity of the Office of the President.  In their insatiable lust for power and wealth, the Republican Party has crossed a line.  They are deliberately destroying those rights and values that they claim to treasure.  They have descended into hypocrisy for the sake of gaining political power and in doing so they are endangering our nation and its long held values of fairness and freedom of speech.

I suppose Glenn Beck and Rush Limbaugh would defend themselves by saying they are inciting all of this chaos for the “good of the country”.  What else would you expect them to say? Perhaps besides enjoying our Labor Day today, we should pause for a breif moment and take note that this is also a truly a sad day for America. A major political party has completely lost its sense of American values and has turned to the politics of desperation, and now allows itself to be led by men who admit to having chemically fried their brains.

I suppose it won’t be long before they start saying that Jesus was a communist too.

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