Free Markets, Free People

The White House Reacts To The Violence In China

Well, not exactly “reacts”. Instead it issues a statement when asked for a reaction:

We are deeply concerned over reports of many deaths and injuries from violence in Urumqi in western China. Reports, so far, are unclear about the circumstances surrounding the deaths and injuries, so it would be premature to comment or speculate further. We call on all in Xinjiang to exercise restraint.

Wasn’t this the same basic message candidate Obama issued concerning Georgia – You boys quite fighting now, you hear?

Here, let me finish the statement for them:

Because, you know, freedom isn’t worth fighting for, and besides Hillary made it clear we weren’t going to be bothering the Chicoms about human rights anymore – so you’re on your own.

Meanwhile an Amber alert has been issued for Hillary who has apparently gone missing in the State Department (although it is being reported that she’s going to meet with former Honduran president Mel Zelaya later this week).

Previous post on the situation that the White House seems not to know much about here.


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65 Responses to The White House Reacts To The Violence In China

  • As opposed to the death of one and wounding of others in Honduras –

    We deplore the use of force against demonstrators in Tegucigalpa in recent days and once again call upon the de facto regime and all actors in Honduras to refrain from all acts of violence,” said U.S. State Department spokesman Ian Kelly in Washington.

    Yes, the brave Ospama administration, making the world safe for ‘democracy’, one misstep at a time (more like a staggering drunken run these days).
    Foreign policy Chicago gangsta style.  Where are the Cowboy diplomats when you need them to tell it like it is?

  • The (Hillary) Clinton legacy isn’t very bright either.

  • O doesn’t waste time with worthless token condemnation so you can feel morally superior.   He’s a man of action!

    • Is TomD arguing that Obama’s words don’t matter now that he is president? They’re “just words”? Nice flip-flop!

  • Oops…it looks like The Clown™ and His Clownettes™ are “meddling” in another country’s affairs again! We can’t have any of that now, can we?

  • Heh.  Tiananmen  Square, and yet President Bush the Elder does nothing, and quietly assures that relations are not harmed.   Clinton attacks that policy, but continues it when he’s in office.  Bush the Younger attacks the Bush-Clinton approach when he’s a candidate, but does the same.   Obama now is continuing the Bush-Clinton-Bush policy.

    Fact is, we have little choice.  Again, those who want us to “do more” can’t seem to think of anything except maybe throwing a hissy fit.   China has us by the short hairs anyway.   They don’t need our market as much as they used to (and are diversifying their markets while stimulating domestic demand), but we absolutely need them to buy our bonds, and not dump our bonds, currency or stocks.

    We are not the power some of you seem to think we are.  Those days are long gone, the Iraq debacle simply showed the world just how limited our ability to shape events are.   That’s reality.   Meanwhile, the “right” seems to think tough talk will make a difference.   It won’t, it will only highlight our weakened state on the world stage.   We are, simply, a nation that has been in decline for three decades, hiding it only with an era of hyperconsumption (driven by a puerile libertarianism) which is now crashing and burning.   We live in interesting times.

    • Damn Scott – how is it possible for you to COMPLETELY miss the point?

    • After Tiananmen Bush imposed sanctions that are still in effect today.
      Obama can’t  bother to do anything other than to ask the ChiComs to pretty please exercise restraint when killing their citizens.
      Erb thinks a serious condemnation will show us to be weak.
      Totalitarian regimes love idiots like Erb, and he loves them back.

    • I went and read Scott’s epic work on ” puerile libertarianism“.  In the end, this epic work boiled down to a small screed against “consumerism” and Scott, somehow, decided this was all the fault of libertarianism.   Scott, it seems, would prefer we all sit around, contemplate r navels, and ponder “whether or not we can forge a sense of meaning that isn’t tied to consumption or mere adherence to tradition and faith.”
      Scott also references a previous writing of his he defines as “exclusivist form”.  This also addresses a direction of thinking toward philosophy and “an introspection on what it meant to be human; ritual and tradition couldn’t provide every answer needed in that new era”.

      Putting these together, we find Scott advocating some “new era” that, in fact, is little different from the Shakers, communes, and monasteries.  That is all well and good for Scott (if that is what he wants), but since any theory of libertarianism would allow Scott to do that, we must conclude Scott is a typical leftist authoritarian actor.  He wants the power to direct others rather than leave that direction to the individual.


    • You dense righties just can’t admit that we wise leftists have it all figured out. We have decided that China is on the rise and we’re on the decline. We decree it, and you just have to accept it. We know intuitively that China is going to do great, because they are run by wise leftists, and they don’t let their peons stop them from doing the right thing. Thank goodness they don’t have any of that silly democracy stuff to get in their way. That’s the real reason for their ascendance.

      Of course, if we all adopt the wise and humane policies of Obama and put wise leftists in control of everything, and then we forego our consumer practices and live as simple peasants under the wise and benevolent guidance of our leftist leaders, then we might once again challenge China. But, no, you stupid righties with your blathering about “freedom” this and “Constitution” that just won’t let that happen.

      Iraq showed us our limitations. And the fact that we won militarily in a cakewalk and eventually defeated the insurgency and fostered one of the most open democracies in the Middle East doesn’t change anything. It just doesn’t, I tell you! It’s all going to come crashing down around our heads any time now. I decree it.

      We’re just declining, declining, declining, and all because you dense righties just can’t stop consuming and won’t do what we wise leftists tell you to. And our decline has absolutely nothing to do with increasing government debt and spending. Nothing, do you hear!?! I decree it. It’s all the fault of you thick, mean righties, just like everything else.

  • Man, you just love pushing that “nation in decline” line of bull don’t ya? Makes you feel all good inside doesn’t it?  Fact is, wishing doesn’t make it so.

    I’ve heard it all before.  Russia was going to beat us idealogically. Japan (and later on) the Pacific rim nations were beating us by buying us all up. Then a Unified Europe would counterbalance us.

    Now it’s China going to topple us.


    Lets see if China in it’s present form even exists 5 years from now. A little freedom can be a dangerous thing.  In the meantime I’ll still take bets on us vs the rest of the field. And in that little black shrivelly thing you call a heart…….so would you.

    • That is a good point.  In order to have a “new era”, you first have to end the old era.  Scott seems to hope a decline of America will provide the impetus for that new era.  It does remind me of Rahm’s “never let a crisis go to waste”.  Except that Scott wishes to define a crisis like the Chinese as “danger + opportunity”.   It would  be interesting to see Scott’s thoughts on why the US emerged from the depression with a “can do”  attitude and urge for success .    I favor the concepts of the “Fourth Turning”.

  • We are in serious decline, both in terms of the economy and our ability to effect world events.  I note that while some criticize my reaction, the most anyone can come up with is that maybe we should “talk tougher.”  Talk is cheap BS.   It’s meaningless if you can’t back it up.  If you can’t back it up, don’t shout.

    • our ability to effect (sic) world events

      Beyond sanctions (which you have ignored twice now), what has any president/congress done in response to the mass killings of citizens in another country? You already oppose military intervention, and we’re obviously not going to lob a few missiles into China. Maybe we could boycott some more Olympic events?
      Please tell us what great ability we had to affect government massacres before our “serious decline”. You’re very proficient at decreeing that we’ve become weak and helpless, but you’ve never bothered to give an example of what we were able to do before our great fall into impotence.

    • And, as usual, all you seem to do is shout here on these pages, Erb. You keep saying “We are falling off the edge” and when someone challenges you by saying “We have heard that before and still came out on top” all you can do is repeat your mantra that “We are falling off the edge.” Wishing won’t make it so, there Erb.

      With all of your handwaving about our decline and fall, the US is still on top of the heap and likely to stay there for some time, even with Obama working overtime to make your dreams come true. Why can I say that when you point to all of your “evidence” to the contrary? Easy – there isn’t anyone out there who has the wherewithall to take over the lead. China? Maybe in a generation or three if they can figure out how to balance Communism with the consumerism demanded by their own citizenry (Ooh, you hate that one don’t you!). Russia? You gotta be kidding, talk about corruption. Anybody in Europe? They are scared of their own muslim immigrants to do anything but cower. Japan? Still stuck in their lost decade and will probably be there for another decade or three. Anybody in the Mideast? LOL! India? If they can learn to balance their crushing poverty with their growing middle class, possibly in 30-40 years or so. Anybody in South America or Africa? Nobody on the horizon, even with Chavez chomping on the bit to be anything more than just a two-bit dictator.

      You do make a minor point that talk is cheap – and I agree. Every time you put a comment in these pages, I see how cheaply Academia can be bought off by some Lefty sloganeering. But underneath it all there is a far more important point regarding cheap talk. And that is Obama. And here it is that I agree with you that talk is indeed cheap. Because the world is fast understanding we have an empty suit at the helm and that all he has going for him is his fast talking. Woe unto us when someone out there, who is truly dangerous, decides to pull the trigger. All of Obama’s fast talking won’t stop the bullet.

  • The cultural change since the depression is immense.   We’ve gone now into deep debt, both publicly and privately.  Credit card debt is near $1 trillion, government debt over $12 trillion, and unlike after the depression, our economy has shifted from production to consumption.   We produce less, consume more, and have been running an unsustainable current accounts deficit to make that possible.  It’s a house of cards that is finally collapsing.  Meanwhile we spend half the world’s military budget, and can topple regimes like Saddam’s, but can’t control what comes next.  In Afghanistan, our relative impotence is on display — we have no hope of impacting real change in Iran and elsewhere.  We have the capacity to destroy the world with nukes, but that’s not a usable power.   Perhaps the military could do more if we wanted, but the public doesn’t support anything but a quick victory.
    So we drift with massive debt, low production, lots of bluster but no bite.   China, Russia, and other powers observe this weakened state and make their own deals with other countries.   Obama gives hope to the Europeans, but he doesn’t seem ready to really do what’s necessary — break from the past ideal of wanting “something for nothing” — consumption without production, power without principle, and prestige without responsibility.    You all can criticize, but the predictions made by the “right” a decade ago have been shown false, and those of us who dangers in Iraq, an economy on the verge of collapse, and real decline in the US (I had comments here long before 2008 about the unsustainable economy) are being proven correct by reality.
    Perhaps you need to consider that much of what I say might have merit.  Some of you seem so lost in ideological bias that you just try to buttress what you want to believe (something Pascal noted about 400 years ago in his time — we believe what we want, and use reason to rationalize it).  The key is to listen to those who offer a different perspective and take them seriously.  The weak mind ridicules different views, the stronger mind confronts but also considers them, and isn’t afraid to admit when someone else may be right.

    • Some of you seem so lost in ideological bias that you just try to buttress what you want to believe (something Pascal noted about 400 years ago in his time — we believe what we want, and use reason to rationalize it).

      Queue the music….
      The clown has arrived to provide words for  his own rebuttal once again.

      Your conceit is awesome, no wonder you like the Can of Span in the Whitehouse, yet another thing you have in common. 

      Talking cheaply & arrogantly through one crisis at a time. 

  • Rick, the power now lies with big business and big money.   So-called libertarians don’t realize that when they simply attack the state, they give license to those who really hold the power — and who manipulate us.   The free market and privatization works against liberty and protects the elite.     I agree the state can become far too powerful and abuse that power, and certainly oppose authoritarianism.   The sad thing is that libertarians don’t see the authoritarian manipulation from big business and corporations, and  fall under the illusion that if govenrment isn’t forcing you to do it, it’s freedom.  That illusion is why, as Barber notes, “markets corrupt children, infantilize adults, and swallow citizens whole.”

    • the illusion that if govenrment isn’t forcing you to do it, it’s freedom

      Take your Marxist crap to your students, Erb, but leave us out of it. The more the government regulates, the more citizens become weak and dependent on their nanny to protect them from the mean ol’ companies. This makes people more susceptible to manipulation, not less. Furthermore, the government now has unprecedented protections for the indebted public that enables us to spend someone else’s money with very little risk.
      In other words, it’s been fools like you who use government to “protect” the public through coercive legislation that has the unintended consequence of turning the public into children.

    • “The free market and privatization works against liberty and protects the elite.”
      Care to explain to me where, oh where, this ‘free’ market you speak of exists?  It surely isn’t in the US.  The sad thing is, some (god help me)… some of what you are saying I agree with.  I can see that over consumption and debt spending are at the root of our problems.  The difference between us, is you believe more regulation, more government, and less freedom is the answer.  I do not!
      “The spirit of resistance to government is so valuable on certain occasions, that I wish it always to be kept alive.”
      – Thomas Jefferson

  • “…the ‘intended’ consequence of turning the public into children…”
    A modest correction.
    I see that Erb is still as much on the side of the oppressors as ever…

  • The difference between free markets and government is markets do not have the sharp edge of the sword to enforce their dictates – be that sharp edge the military or the courts. To choose market forces over government dictates is to preserve the right to be able to make a choice.

    “markets corrupt children, infantilize adults, and swallow citizens whole.”

    Just one more example of Lefty Sloganeering. Can’t you do any better than that?

    Didn’t think so but had to ask the question anyway.

  • Erb’s blustering about the lack of industrial production has zero basis in reality.  We produce more in the U.S. than any other country in the world by a factor of more than 2x.  Our industrial production is roughly $2.7 trillion versus $1.24 trillion for Japan and $1.21 trillion for China.  Our service sector is almost 3x larger than Japan’s, 5x that of Germany, and 10x that of China.

    Anyone who can say with a straight face that free markets work against liberty is so completely ass-backwards that its impossible to take seriously.  Which is why the Professor is ridiculed mercilessly for spewing that garbage.  So here’ the thing.  I’ve considering Erb’s position, compared standards of living, looked at the numbers, and decided that he has no idea what he’s talking about.

    • Give the guy a break. History has shown that totally govt.-managed economies and 5-year plans and the like manage to provide the people with cheap, plentiful food, loads of energy for a blossoming entrepreneur class to capitalize upon, and generally a decent amount of leisure time to pursue various interets.

      sarcasm off.

      I’m no University big wig, and I don’t have a Ph.D or even a Masters. But man oh man, I have zero effing respect for some eggheads who get so bedazzled by $10 words and the convoluted wanderings in idealogical laybrinths that they can form opinions that blatantly fly in the face of history so obvious and known it basically appears in a 3rd grade primer.

      Good lord.

      • Shark!  Professor Clown demands you respect his authori-tie.
        He’s pretty sure he can put more abbreviations after his name than you can.  I’m not sure why that makes him important and smarter, but he seems to think it does because he reminds everyone of it constantly.

  • SShiell, telling that you can’t make any argument against the US being in decline and facing severe problems.  Instead you just give superficial comments about other countries, and a weird and ignorant comment about Islam somehow taking over Europe.   That’s silly talk.   And, given how disastrous Bush’s Presidency was, your attempt to somehow belittle Obama seems to be jealous drivel.  You know he’s popular home and abroad, you know he’s dealing with problems he’s inhereted from Bush, Bush’s disastrous wars, and the economic collapse of 30 years of misguided deregulation and policies that encouraged consumption and discouraged production.  You seem to think people don’t realize what a mess Obama was handed.   I think he’s not making a bold enough change to get us out of this.
    But hey, stay in your nice little fantasy world where the US is somehow immune to the laws of economics and the forces of history, where the Iraq war didn’t prove the relative impotence of the US on the world stage, and where you can just pontificate and not have to think.   Because if you’d ever actually get off going from your gut and actually engaging in real thought and discussion you might learn something.    I just think you’ve stopped even trying to think, you seem to be all emotion.

  • The stupidity of the claim that free markets bring liberty is evident in the control corporations have over our politics and consumer behavior.    Here’s the problem: people correctly realize that government regulations limit their freedom, and thus tend to oppose them.   But individuals have little real power.   People also oppose not regulating big business and big money.  They have massive power, they manipulate us constantly with advertising, political deals with Congress, and by using globalization to exploit and control.   They have power, they limit freedom, and free market true believers ignorantly ignore that.   They fear the state, but don’t fear the awesome power of big money.  It’s so obviously absurd that I can only conclude that radical free market believers have an irrational sort of faith, they obviously aren’t thinking.   Now, we need markets, and over-regulation can be as bad or worse than under-regulation.  But the idea that corporations will use their wealth and power benignly while governments will be malevolent is a bizarre faith.

    • political deals with Congress, and by using globalization to exploit and control.

      and the idea that that’s STILL happening this very instant under the current Congress and President obviously doesn’t ever occur to you does it Dr. Clown.

    • So ifr corporations have all this power, why do they need to make deals with Congress?

  • Shark, you seem to think there are two choices: complete free market and communism.   You seem to think that one has to choose one or the other.    You don’t realize that there is a vast middle between the two extremes.   So yeah, with that level of thinking, I’m not surprised you think normal everyday words are “convoluted wanderings” and that anti-ideological pragmatism is “idealogical laybrinths (sic)”.   Perhaps you just don’t understand the issues being discussed.

    • Oh, I understand quite well Perfessor. Please don’t talk down to lil’ ole me. I mean you use these big words like a city lawyer and they make my head feel like rocks are all a-jumbly in it, and you throw around these big idears that I can’t wrap me teensy untrained mind around and me and my vokaubularee ain’t up to snuff……………

      …..but I know very clearly what you are and what you advocate.

  • No, those on the side of the oppressors are those who do not understand that power — especially money and political clout — is a danger to liberty, not just governments.   The left often under estimates the danger of too much government, but the blind eye some “libertarians” cast towards immense corporate and financial power in the private sector, and the impact that creates for those people to manipulate and control others, denying liberty, is amazing.    Those who defend big money are on the side of oppressors as much as those who defend big government.

  • First, massive wealth can be more effective than the sword, especially in a society like ours.  Second, massive wealth controls the sword.    You’re being manipulated and controlled and you don’t even realize it, and you defend your oppressors!


    • You just don’t get it do you, sigh.
      with the MORE than adequate demonstrations of the sword government can wield over corporations already staring you in the face over the last 6 months.
      The head of a major American auto manufacturer forced out of his job by the government.
      Government control of two of the major auto manufacturers.
      Government intervention into the banking system.
      Government intervention via bunk science into the very fiber of the American life style through trading on a fictitious government created commodity (Carbon credits).
      Government intervention into what is probably the best health care system in the world.
      Major financial institutions, destroyed.
      And what, children, did EVERY, SINGLE, ONE of them have in common according to Dr. Erb?  Why, they were MAJOR CORPORATIONS!  With POWER and MONEY and INFLUENCE!
      And yet…here they sit, destroyed, disbanded, assumed, controlled, or soon to be.
      By who?
      Ah…it seems….by Government.
      And you sit there and pretend that moneyed, extremely wealthy, influential, venerated Corporations have ‘power’ to defy a Government like the United States.   That’s silly talk.  Perhaps you just don’t understand the issues being discussed.
      Actually, there’s no perhaps about it.

    • You’re being manipulated and controlled and you don’t even realize it, and you defend your oppressors!

      I’d argue against this, but I have to go to the store. I. Must. Buy. Something. I. Can’t. Help. Myself.


      F’ing bingo.

    • Right. Everyone but you is controlled by the power. Talked to your therapist about that?

  • Tom, do you know what a current account deficit is?  Do you know that in the early eighties we went from current account surpluses to deficits, and our industrial sector has been contracting as we’ve been consuming more, mostly from third world countries?   Your numbers are irrelevant without comparative context.   Our jobs have shifted from production to the service sector, a very vulnerable and fragile sector in times of an economic decline.  I don’t think you realize just what Reagonomics has done to the country — this is the start, not near the end of a major recession — or worse.
    But go on with your bluster, Tom.   You aren’t denying my point at all, and you can’t.   Why do you think the economic crisis hit — a high current accounts deficit, unsustainable debt (credit card debt went from less than $300 billion in 2002 to about $1 trillion now, government debt from $5 trillion to over $12 trillion, home equity at all time lows as people owe more on property than ever)…well, keep whistling past the graveyard.   Reality bites.  Hard.

    • And even though you’re claiming it’s our profligate spending and over indulgence that CAUSED this problem, you advocate and encourage the government to go on a spending binge unrivaled in world  history in order to ‘fix’ this problem.
      Despite the studies and proof that following a similar pattern in the 30’s kept the nation in depression longer than necessary, and even though Japan following a similar course has gone from a super powerhouse to an economy affected by malaise  (points  which you never address, while claiming others cannot refute your ‘arguments’, if that in fact is what they can be called.)

    • And of course it was the evil corporations that did all that. Government was just an innocent, powerless bystander.

  • Here, let me finish the statement for them:

    Because, you know, freedom isn’t worth fighting for, and besides Hillary made it clear we weren’t going to be bothering the Chicoms about human rights anymore – so you’re on your own.

    When a Muslim mob goes on the riot and burns up the homes of non-Muslims my first instinct is not “they are fighting for freedom”.

  • I’m well aware of what a current account deficit is.   Do you know what the flip side of a current account deficit is?  Its a capital account surplus.  The Chinese loan us money at low interest rates which we use to buy the stuff they produce.  And they’ll continue to loan us that money because if they don’t, we’ll stop buying the goods they make, unemployment in China will rise dramatically and you’ll see even more social unrest in China than you do already.  And that is a much scarier proposition for the Chinese leadership.  As an aside, the financial press was all about the supposed ‘de-coupling’ of the Chinese economy from the world economy in late 2007.  That came to an end real quick when the Chinese stock market lost 60% of its value from Nov ’07 to Oct ’08 (the U.S. was down about 35% over same).

    The economic crisis hit for a lot of reasons – artificially low interest rates, irresponsible lending/borrowing, thinly capitalized banks, blind faith in financial models, etc.  But the current account deficit didn’t have anything to do with it.  Otherwise, you would have seen a collapse in the value of the dollar which hasn’t happened (yet).  Its actually up versus the Euro since this recession began (1.60 vs. 1.4) for instance.   And, in fact, the current account deficit has fallen as we’ve imported less in $ terms from both China and oil from the Middle East.

    Consumer financial obligations as a % of disposable income was 5.65% in 1980 and is now 6.02%.  Higher? Yes.  Crushing burden?  No.  Total financial obligations as a % of disposale income was 15.9% in 1980 and is 18.5% now.  Once again, its higher but I don’t think its going to end capitalism as we know it.  Which isn’t to argue that de-leveraging doesn’t need to occur, only to rebut your assertion that these are the ‘end times.’

    As for context on U.S. industrial production, let’s look at the Industrial Production Index put out by the Federal Reserve.  In 1980 it was about 55.  Its currently around 96.  Your argument that our industrial production has gone downhill since 1980 is wrong.  Has it fallen in the last year?  Of course it has, as one would expect in a serious recession.  Does it portend the end of capitalism?  Once again, I doubt it. 

    So yes, in fact I am denying your point, which seems to be that capitalism and free markets are something to be fought against.

    • Yikes – would you please mail what’s his name’s a$$ back to him at your convenience?

    • Tom, he figured he could toss the big words out to scare you off by asking about the current-account deficit.  Now prepare for either a dervish-like spin or <crickets>.  He’s done with you, you assembled facts to refute his arguments.
      Chances are that’s not covered in his little socialist primer so he’ll go back to deriding shark as if you never responded.
      And through all of this he manages to avoid the discussion of the White House reaction to yet another crisis that is dramatically different in how it confronts the Chinese (that is, it does NOT) as opposed to how it reacts to say, Hondurans.

      • Correction on record – ‘deriding shark’ should be ‘trying to harpoon shark’.
        I know his chinese made 5 foot inflatable rowboat and salad fork don’t frighten Shark much.

    • You have Erb at a disadvantage. He has no access to data or statistics since the Great Soviet Encyclopedia went out of business and he is not creative enough to invent them himself.

  • I actually find Erb’s comments entertaining at least for sparking interesting exchanges, much like mkultra used to do, but throwing out big numbers and a few buzz words does not an argument make.  The world economy has problems.  I get it.  But to think that becoming more socialist is the answer to those problems is to ignore history.

    And this canard about corporations controlling consumer behavior is hilarious.  I have a good friend who designs marketing campaigns for some big consumer brands.  And he spends most of his time studying consumer behavior in order to design more effective campaigns.  So is it the consumer pushing the corporation or the other way around?  JWG’s comment above is spot on.  Its just like the a leftist to insist that people can’t help themselves and are always being taken advantage of. 

  • It seems Erb is obsessed with the idea of the consensus – note his BS comments regarding Global Warming, etc.  But from the commenters on these pages, it seems that it is Erb who is out of touch with the consensus of points being brought to this table.  Not only that but his arguments simply SUCK!  He normally strolls in, leaves a turd of a comment and is never heard from again.  In this case he stays around in order to “put all of us poor serfs” in our place with his well thought out nuggets of wisdom.

    Well, Professor, I agree with McQ – you just got SCHOOLED by Tom and your nuggets are, as usual, really just turds.

  • By the way, my take on this is about the same as many libertarian economists, notably Peter Schiff whose claims that we are consuming too much and producing too little were laughed at — and now are a hit video clip.   China of course was able to buy bonds, currency and stocks, thereby funding our current account deficit; they knew the money would go back to them!  So did the Saudis and others.   It’s win-win for them, they get part ownership of the US economy and the money comes back in terms of buying their industrial goods.   We win because we can consume cheap goods.  The problem, of course, is that it is unsustainable.
    Schiff and other so-called libertarian economists are predicting hyper inflation for the US.   I’m not convinced that will happen, but the high debt levels combined with a rebalancing of the economy to rectify the unsustainable current account deficit will lead to severe stress on the dollar, and a decline in the US standard of living.   We will not get back to the heady days of 2006 because that was built on a house of cards — a bubble economy.
    The fact is that we had a “wealth illusion” caused by a belief that stock or housing values were “real wealth;” obviously, that wealth was cut dramatically for lots of people.   People wanted something for nothing, they actually bought the BS that they “earned” large returns simply by putting money into the stock market (or real estate).   They believed that the money was being invested and producing more wealth.  But it wasn’t — it was speculation, not production, and it’s collapsed.
    So you can have your optimistic read.   I was predicting this kind of sharp economic downturn (which I think is only beginning) years ago due to the unsustainable  bubble economy and how we were living beyond our means, evidenced by the current accounts deficit.  I see that restructuring start, and expect real pressure on the dollar soon.   We can hurl statistics at each other, but just as Schiff wagered Arthur Laffer (who was mocking Schiff for predicting a recession) a symbolic penny I believe, I’ll wager you a penny that this is the start of a real global restructuring of the world economy which will leave the US in a weakened state.   Again, I’m not convinced Schiff and others are right about hyperinflation — but that is possible.

  • Well, Tom, I suggest you read Benjamin Barber’s “Consumed: How Markets Corrupt Children, Infantalize Adults, and Swallow Citizens Whole.”   There is vast literature out there about the horrible impact on our values and ability to maintain a stable society thanks to hyper-consumerism and the power, unchecked, of big money.    And if you study psychology and the methods of marketing, you’ll see that people are easy to control and manipulate.   The irony is that the right want to claim people can “help  themselves,” but then complain that the left or Obama is “brainwashing” the people — and sometimes call people “sheeple.”   Yet, if people are being sheep, then clearly they are being manipulated and not helping themselves.   There is a contradiction in that kind of thinking.    You have your biases; I strongly suggest you read  with an open mind some of the work on there on consumerism (rather than just going with a quick antecdote from a friend).   It’s frustrating that the left too often trusts government, and the right too often trusts big money and “free” markets, but both ignore the awesome power each side can use to enslave them.

    • Ho Hum. I hate to bust your bubble sonny, but this materialist/consumerist crap has been going on for years. Vance Packard, ‘The Man In The Grey Flannel Suit’, etc. People have made a good living preaching about this for 50 years that I know of. I believe there are even applicable biblical passages. Perhaps if you had paid attention in class you would have learned a bit about all this alienation, struggle against corporatism and consumerism, blah blah blah. Time to put away the childish alienation thing and become a man.

      And yet, we manage to stagger on.

  • Looker, I think we can’t continue to increase the federal debt at this pace, it could lead to real, intense and painful stagflation.   The claim that the depression was lengthened by spending is, however, absurd.  Great Britain did not try a new deal, and they languished too.   I believe the best economy in the 30s was Germany’s.

  • Looker, do you know how pathetically naive the “governments have guns so they have all the power and corporate money is harmless” sounds.   You obviously haven’t been paying attention, so caught up in choosing a political side and then going with your emotions.   People like you have caused this current mess — eyes shut, minds closed, and unwilling to listen to points of view different than your own.   But you inspire me to work hard in my profession to keep others from going down your path!   🙂

  • Professor, you write “People wanted something for nothing, they actually bought the BS that they “earned” large returns simply by putting money into the stock market (or real estate). They believed that the money was being invested and producing more wealth. But it wasn’t —it was speculation, not production, and it’s collapsed.” When only a few sentences earlier you say that the Chinese buy stocks, bonds,and currency and that means they own a piece of the economy which I assume you think is good. So when the Chinese do something its noble and smart, but when U.S. citizens do it, its BS? A bit of a contradiction I think.

    I’m sure there’s a wealth of literature, written by folks who think just like you, about how easy people are to manipulate. Maybe its right and maybe its wrong. But the fact that people can be manipulated in no way justifies using the government to force people to do what you consider right. That’s what you never seem to get.

    I’m not surprised you think the best economy in the 30’s was Germany. The government essentially took over control of the economy, ran huge budget deficits, and “In place of ordinary profit incentive to guide investment, investment was guided through regulation to accord with needs of the State.”

  • Tom, the Chinese are learning that they cannot rely on investments in the US.  That’s why they are stimulating their domestic economy and expanding markets, especially in other parts of Asia.   But you don’t deny my claim — that people were caught up in the “something for nothing” delusion that by investing they truly earned large returns.  Well, that delusion has sure crashed and burned!
    As to Germany — yes, it’s economy did well in the 30s.  But it did so in preparation for war.  You mentioned your friend in consumer research.  Goebbels was obsessed with researching what the German public wanted and would react to.   Now, were the Nazis manipulating the people or, given their research into German wants, were the people manipulating the Nazis?  Consumerism has more in common with fascism than people realize.

    • Such puerile reasoning . People do not realize how much oranges have in common with bowling balls, either.

  • Timactual, it’s documented that it has gone out of control in the last twenty or so years, to levels never seen before.    I mean, when credit card debt goes from under $300 billion in 2002 to $1 trillion today, well, that’s simply one symptom.   Yeah, there have been critiques of materialism for a long time — Pascal complained of people seeking distractions, and Rousseau noted the creation of artificial needs.   But it’s reached not only an unsustainable level, but one dangerous to our values and to capitalism itself.   It’s sad that some of you are so wrapped up in ideology that you don’t see what’s happening.

  • Looker, Tom never really handled the current account deficit — can he really defend it reaching 6% of GDP as it did in 2006?   Or that it was financed by the Chinese to their benefit (though they are realizing this can’t go on and are finally diversifying)?   It’s put us in a position where we have to restructure our economy — that’s part of the decline that just about everyone admits America is experiencing.
    I am also not here to defend the current administration’s response.   You can play the politics a sports game, all emotion, no reason or rational discussion — just attack the “enemy” and defend your faith.    But watch and learn as reality continues to force us to reap the results of 30 years of living beyond our means.   Also, you’ve been in denial of the evil we’ve done to other countries in the name of our greed.    Students are amazed when they learn about what our foreign policy has been, and get angry reading simple facts about our aggression from Vietnam to Iraq.  The new generation is going to have to deal with the problems created by past policies — and I actually am optimistic that they’ll make real changes.

  • Students are amazed when they learn about what our foreign policy has been, and get angry reading simple facts about our aggression from Vietnam to Iraq.


    And then they get a dose of reality and learn that the “facts” you fed them are actually a bunch of skewed boilerplate talking points designed to advance your current narrative.

    Pally, you could tell us it’s a simple “fact” that the sun rises in the East and sets in the West and we’d still do quite well to be skeptical of you

  • “I’m not surprised you think the best economy in the 30’s was Germany. The government essentially took over control of the economy, ran huge budget deficits, and ‘In place of ordinary profit incentive to guide investment, investment was guided through regulation to accord with needs of the State.'”
    In point of fact, Germany did NOT “do well,” it merely engaged in an economic shell game using a phony front corporation, Metallurgische Forschung, to produce bills (MEFO bills) of exchange that it used to finance irresponsibly inflationary spending. Even at that, they were less economically irresponsible than FDR, or, for that matter, Obama.
    One of the reasons that Hitler had to go to war in 1939 is that his economic house of cards was going to collapse soon if he didn’t get his conquests going.

  • Sometimes I have to check to see if you’re Ott Scerb after wading halfway through your posts.   The farce as fact is “just silly”.

  • Why would I defend some relatively arbitrary level on the current account deficit?  You specifically said that it was one of the causes of the current crisis.  I disagree because we haven’t seen a substantial devaluation of the dollar (could still happen though) which would be one manifestation of a problem caused by a large current account deficit.  In fact, interest rates in general are still extremely low with interest rates on the benchmark 10 year Treasury well below 4% and lower than where they were going into the crisis.  Which says to me that despite all the talk, the Japanese and Chinese have no intention of letting their currencies appreciate vs. the USD because it would crush their employment pictures.