As Americans prepare to file their income tax returns tomorrow and attend protest Boston-style “Tea” parties, Barack Obama is blowing balloons up with hot air.
Obama is full of enough hot air to fill up economic bubbles and some pretty big balloons.
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We’ve quoted Kevin Phillips repeatedly on topics as varied as authoritarianism and racism, the GOP “Southern Strategy”, and the American and world economy. Many of Phillips’ views recently echoed in Simon Johnson’s The Quiet Coup.
Recently the Kevin Phillips book Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism (which we wrote about HERE) was released in a paperback version and Phillips provided his latest views on the American economy and Dimocrats in various interviews.
Phillips weighs in on Dimocrats and Obama:
An author who saw the global financial crisis coming fears the next bubble will come in the form of inflation and has little confidence U.S. President Barack Obama’s team is up to the challenge ahead.
“The Democrats have replaced the Republicans as the big benefactors to the financial community,” said Kevin Phillips, author of “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.”
“The financial community is donating more to Democrats than ever before and you’ve got more Democrats in the financial community, creating a very powerful pattern there. I don’t think you’re going to see the Obama administration and Congress willing to be tough enough in dealing with these things,” he told Reuters.
For a long time Phillips has been a voice rarely heard in Big Media publications and appreciated by Republicans and Dimocats even less for every appearance he does make:
Phillips, a former strategist in the Nixon White House who has turned highly critical of the Republicans and voted for Obama in 2008, published “Bad Money,” his 13th book, a year ago.
The paperback edition came out March 31 with a revised preface and afterward, interpreting the events of the past year, but the prescient body of “Bad Money” remains unchanged.
A year ago, he warned of a the pending explosion of a 25-year “multibubble” that started in the 1980s, when the financial sector accounted for 10 percent to 12 percent of the U.S. economy had started metastasizing into an “arguably crippling” 20 percent to 21 percent by the middle of this decade.
Overleveraging and easy credit was bound to create disaster, he warned.
Phillips does not think liquor should be provided freely to drunk alcoholics and thinks the world of finance has essentially been on the economic equivalent of a severe drunk.
Phillips assigns much of the blame to former U.S. Treasury Secretary Henry Paulson, but perhaps even more on Federal Reserve Chairman Ben Bernanke, who he calls a “disaster,” and his predecessor, Alan Greenspan.
Phillips calls Paulson a Wall Street insider who was looking out for his own, and Bernanke an academic misguidedly trying to refight the 1930s Great Depression. Together they formed the wrong team at the wrong time whose ad hoc approach threw away hundreds of billions of dollars and more than doubled the Fed’s balance sheet, he says.
“What you’re seeing Bernanke do is he’s trying to create a bailout reflationary bubble, which he can’t describe as a bubble, just as Greenspan couldn’t describe the housing mortgage bubble as a bubble. What we’re seeing by Bernanke is a covert attempt to rebubble,” Phillips told Reuters.
A reinflation of the disasterous mortgage bubble is the aim. Hot air and bogus claims provided by Obama along with an indefatigible printing press spewing paper dollars is the method.
Moreover, a commodities cycle probably started early in this decade and is only being masked now by recession, Phillips says, presaging a repeat 1970s style inflation, he said.
“The danger is that the great unwind — the unraveling of the mammoth buildup of debt — is under way. If that predominates, Bernanke’s theory is you’re going to have deflation,” Phillips said.
“My theory is that if we are in a commodities cycle, what you will get will be more like 1973-74-75 … where as soon as the recovery begins you get rising inflation because you’re going to play havoc with all money supply and liquidity that’s been unleashed ” he added.
Who will be hurt? Who is getting hurt now?
Meanwhile, the taxpayer and small investor have little defense.
“The average person is going to be on the periphery of concern and I think that’s rotten,” Phillips said”.
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The Hopium addled reject anyone who does not worship Obama and are sure, along with Dimocrats, not to think but rather to sniff and shrug their shoulders at criticism by someone who only voted for Obama, not worshipped at the Chicago throne.
Someone who did worship at the Chicago throne is the backstabbing Robert Reich. But Reich does not see the Obama glimmers of hope.
Why We’re Not at the Beginning of the End, and Probably Not Even At the End of the Beginning.
But we’re not at the beginning of the end. I’m not even sure we’re at the end of the beginning. All of these pieces of upbeat news are connected by one fact: the flood of money the Fed has been releasing into the economy. Of course mortage rates are declining, mortgage orginations are surging, and people and companies are borrowing more. So much money is sloshing around the economy that its price is bound to drop. And cheap money is bound to induce some borrowing. The real question is whether this means an economic turnaround. The answer is it doesn’t.
The first sentence here tells the story:
Cheap money, you may remember, got us into this mess. Six years ago, the Fed (Alan Greenspan et al) lowered interest rates to 1 percent. Adjusted for inflation, this made money essentially free to large lenders. The large lenders did exactly what they could be expected to do with free money — get as much of it as possible and then lent it out to anyone who could stand up straight (and many who couldn’t). With no regulators looking over their shoulders, they got away with the financial equivalent of murder.
Murder. ” The financial equivalent of murder.”
Backstabbing Reich, who irresponsibly backed the Hopium pushers from Chicago only now informs Americans that Hopium Is Murder:
I admire cockeyed optimism, and I understand why Wall Street and its spokespeople want to see a return of the bull market. Hell, everyone with a stock portfolio wants to see it grow again. But wishing for something is different from getting it. And cockeyed optimism can wreak enormous damage on an economy. Haven’t we already learned this?
We learned this lesson a long time ago Robert Reich. It was you and the Obama enablers, cynical Hopium pushers from Chicago, and Hopium addicts, who heard celestial choirs and nodded off with the Hopium syringes stuck in your arms while mumbling “hope”, “change”.
Now the American economy is drifting away. Up, up, and away.