State of the U.S. Economy/Federal Budget Factors Troubles/Jobs

The Present U.S. economic crisis was not a consequence of over-taxation. It is a result of Wall Street deregulation the past 40 years leading the nation through an increasing cascade of financial crashes and increasing public debt.

Inadequate political and economic philosophical competence in government has let a financial/arbitrage, LBO/CBO, derivative gaming of Wall Street promotes a corrupting new class of market predators. The financial predators have expanded the leverage power of abstract capital to exploit their prey of real, material product producing industry. Government never reigned in those predators. In fact Allan Greenspan and a host of other supporters of deregulating the financial sector defeated better philosophical management approaches to governing capitalism for the benefit of the citizens of the United States. My most recent book of reading on this topic ‘The Age of Greed’ by Madrick provided data for a few of the ideas of this post.

Since the Reagan administration U.S. tax rates have been at an historical low going back nearly to the depression era. The massive public debt of the 80’s and 90’s was largely caused by a perfidious deregulatory financial sector investment strategy of dumping debt wherever possible while cutting taxes. The public provided bail outs for numerous corporations and financial businesses the last 30 years and paid for much public infrastructure supporting corporate users such as Interstate highways and airports.

Elite hedge fund managers (George Soros earned 3 billion dollars in 2007) investing for wealthy packs of financial hyenas scouring the globe for vulnerable business and currency prey to kill and devour while real unemployment rate in the U.S.A. may be around 17%. Only 56% of working age Americans have jobs.

Some economists favoring a self-regulating economy without government intervention or governance also support the idea of a naturally high level of unemployment below which inflation occurs. Victimizing the working class is thus regarded as the natural right and duty of those with concentrated wealth benefiting the public by enriching themselves and wrecking the economy of the poor.

I enjoy reading philosophy yet never did get to Ayn Rand’s books. I enjoy more technical or classical works of philosophy and generally avoid books like; Thus Spake Zarthustra, The Communist Manifesto, Mein Kampf, None Dare Call It Treason and so forth running a little too political or anecdotal for my philosophical interest. Still, since many ‘conservatives’ read Ayn Rand’s books with more enthusiasm than I had in reading Anna Karenina so in some future decade I may find a copy of ‘Atlas Shrugged’ to browse’.

As a Russian émigré’ I would guess Ayn Rand was naturally moved to be anti-statist emerging from a Soviet-Tsarist historical background of totalitarianism. Such ideological thesis-antithesis evolutions do not however allow much space for intelligent, adaptive social analysis in political-economy. Economic individualism in pursuit of abstract financial goals that manipulate real property in the wild kingdom can lead to chaos, anarchy, nihilism and general unhappiness on the happy planet; in fact the entire environment can go to pot. George Soros’ challenging environment of upbringing also obviously led him to develop a skill exploiting abstract industrial financial and economic transaction of the market rather than developing new industry.

The conservative investment strategy plundering and giving away U.S. national economic quality and quantity has destroyed labor unions and the progress of income for manufacturing workers. The nation transitions into service workers at lower pay and non-materially productive businesses plus medical care providers. Free enterprise has difficulty surviving hordes of banking and financial predators attacking the manufacturing ungulate herds like the hyena, wolf and cheetah.

The U.S. economy experienced a surge of financial deregulation from the Carter administration letting higher interest rate charges on credit cards to the securitization of mortgages and later Allan Greenspan’s support of collateralized debt obligations and derivatives. The Reagan administration allowed Standard oil to buy Gulf oil during his administration reducing competition in gasoline pricing, and in the Bush II years Wall Street’s major financial firms were allowed through lax regulation and a loose political philosophy of letting the financial market regulate itself to sell derivative and mortgage debt obligations in tranched repayment bond packages to more than 40 times their collateral. The nation had more than 17 trillion dollars in mortgage debt by 2006.

The over-production of house construction and trading of mortgages in a variety of obscure and risky packages to investors allowed Wall Street bankers and traders to collect huge fees-they were stimulated to sell sub-prime mortgages with gouging contract terms to poor buyers doomed to fail at repayment. The financial sector of the economy was soaking up profits and little was being invested in honest industrial and infrastructure growth.

In a way Wall Street invested only in jobs that cannot be outsourced abroad to cheaper production facilities in China. China of course did buy much of the mortgage securities from Fannie Mae and Freddie Mac.

Restarting the U.S. housing construction business cycle may be difficult with so much surplus housing the poor and unemployed cannot afford to buy-maybe the homes should be rented at half price rather than stand empty for a loss.

Honest lenders will be at a disadvantage in a securitized housing finance business environment. Deregulation of the recovered financial sector again may encourage a new housing bubble cycle to begin. Creating jobs in new, materially productive non-outsourcable industry would be a preferred direction in reducing the U.S. employment rate. Those jobs could be in building artificial, hollow mountain ranges for housing, business and hydroponic gardening and retail office space etc. The exteriors would resemble natural ecosystems yet collect solar and wind power. Integrated space for non-fragmented ecosystem continuity would exist along the base.

I have been reading ‘The Age of Greed’ by Madrick recently and become more informed of some of the structural problems of Wall Street and government the last 40 years in directing capital into a spaced out financial sector instead of into manufacturing and modernizing infrastructure in the U.S.A. That will be very challenging to correct.

I learned recently that the U.S. Government extended 12 trillion dollars in loan and debt guarantees during the 2007-2008 financial crisis. Merely returning to business as usual-to a deregulated Wall Street environment allowing the domination of investing in financial instruments for profit instead of businesses for themselves will continue to degrade the content of the U.S. economy as traders look with predatory gaze upon anything that can be leveraged for buy out or collateralized, packaged as debt obligation and resold as derivatives. Real manufacturing capital investment is given unnecessary risk and volatility by the corrupt financial market forces, and inventive material genius is degraded in favor of slick financial skimming genius in the deregulated business environment wherein irrational empirical investment priorities are regarded as collectively rational. If the invisible hand of CDOs and derivatives without regulation is regarded as rational, so might that of a robotic arm under the control of a random pickpocketing program.