This one was even more widespread, since it combined turning homes into bundled commodities with the build-it-to-flip-it-side that led to the regional housing gluts, caused in large part by the government pressure to lower requirements for obtaining those mortgages. The last part, along with falling under the “no good deed goes unpunished” category, also is the law of unintended consequences, though though 3-5 years ago who fought against any reforms of the industry after the first problems with Fannie Mae and Freddie Mac came out shouldn’t be allowed to get away with acting like wide-eyed innocents in this debacle.

The old media (centred, like Wall Street, in New York) may gnash its teeth, but all this is a good thing. The real economic expansion in the US has been moving south and west for decades. Finance and Media are just slower on the mark.

The Nazi’s wrecked Germany’s economy; real wages in Germany dropped 25% from 1932 – 1938. The “wartime command economy” of the United States from 1940 – 1948 featured mass rationing, wage freezes and the necessity for millions of women to take jobs just to keep food on the table.

The economic growth going on in China and Russia is NOT a result of their “command economy” features; it is a result of the RELAXING and REDUCTION of government command on the economy. And if you believe opinon polls regarding the public’s approval of the leaders of those nations, you are hopelessly naive.

The fact stands that economic progress all across the globe is inversely proportional to the amount of government regulation and statism imposed on the economy involved.

That’s not exactly right. The President nominates the Fed Chairman, who is confirmed by the Senate.

Then he serves for a term in office. Neither the President nor anyone else can fire the Fed Chief. He has independent authority.

On Fox News Sunday Karl Rove said the Obama and McCain were “going too far’ in their campaign ads – that they were both exaggerating some truths when there was no need to.

CNN’s headline about Rove’s comments? “Rove: McCain went ‘too far’

To maintain the pretense of evenhandedness CNN included one line to the effect of “he said the same thing about Obama, too”

Mark Warner, Mitt Romney, Michael Bloomberg, Bobby Jindal.
They passed on them.
They went with Jingoism, perceived foreign policy “creds”, and pandering to race and gender.
The economy and the threat to America’s future standard of living were judged “not that important”.

America gets what it deserves in it’s leaders and candidates.

And it is always good to note – especially in a declining but smug and compacent America -that many democracies fail, many great civilizations fall.

And all the time in decline down to dissolution – the citizenry tends to remain deep believers that they have the greatest nation ever, with the best and smartest and hardest working people the world has ever seen, who can out-produce and out-compete anyone. With the most perfect laws and treaties and Constitutions ever gracing sheets of paper.

Horse pucky.

The greatest long-term economic growth ever has happened in authoritarian capitalist economies. The Meiji Restoration, the Italian recovery under the Fascists, Nazi Germany, The Wartime Command economy of the USA 1940-48, Singapore under the benevolent despot Lee Kwan Yew, the Korean miracle of the 80s, finally – Rising China 1995-present with a 13% annual GNP growth, eclipsing even Meiji Japan’s.
This growth and huge rise in people’s standards of living is accompanied by immense popular satisfaction with the successful rulers. In 1938 Churchill commented that whatever odious policies the Nazis had, there was no dispute of the economic miracle they achieved or the immense popularity of Party leaders.

It can of course be argued that having such a Command-led capitalist economy contains inherent seeds of destruction as empowered forces involved in the success in turn get out of control…

But as of now, the two nations with the highest growth, greatest rise in standards of living, and the highest approval of leadership by the people (59% and 86%) are Russia and China.

Contrast that with satisfaction levels and GNP growth of Western “free” nations. All under 3%, with satisfaction levels of French, British, American leaders in the 20% range or less.

China is now the part-owner of wastrel debtor America, led by a man that Americans say they dislike more than they dislike Putin.

“This biggest bailout and nationalization in human history [Fannie and Freddie] comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history. These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs. But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed – untempered by fear of loss or of punishment – leads to credit bubbles and asset bubbles and manias and eventual bust and panics.

‘The ideologue “regulators” who literally held a chain saw at a public event to smash “unnecessary regulations” are now communists nationalizing private firms and socializing their losses: the bailout of the Bear Stearns creditors, the bailout of Fannie and Freddie, the use of the Fed balance sheet (hundreds of billions of safe US Treasuries swapped for junk toxic illiquid private securities), the use of the other GSEs (the Federal Home Loan Bank system) to provide hundreds of billions of dollars of “liquidity” to distressed, illiquid and insolvent mortgage lenders, the use of the SEC to manipulate the stock market (restrictions on short sales), the use of the US Treasury to manipulate the mortgage market (Treasury will now for the first time outright buy agency MBS to manipulate and prop up this market), the creation of a whole host of new bailout facilities (TAF, TSLF, PDCF) to prop and rescue banks and, for the first time since the Great Depression, to bail out non-bank financial institutions, and a whole range of other executive and legislative actions (including the recent bill to provide a public guarantee to mortgage for banks willing to reduce their face value).

‘This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).”

Neither Obama or McCain would dream of talking about this, of course.

I’m not sure the way out, and what government should and shouldn’t do. This guy Nouriel Roubini was on Charlie Rose the other night, and really sounded like he knew what the hell he was talking about. He wasn’t particularly left-wing either. He’s a doomsayer who everyone dismissed two years ago, now many of his predictions have come through: http://www.rgemonitor.com/blog/roubini
(Requires registration that is free)

This crisis should drive home the idea that this is a serious election. No more lipstick and pigs.