January 16 2009 show notes
Jan. 21, 2009 5:46 am
By Thom Hartmann A...
- "Brunch with Bernie" with Senator Bernie Sanders, Independent of Vermont.
- Guest: Ravi Batra, professor of economics at Southern Methodist University, Dallas.
- 'Anything Goes' Friday.
Topics, guests, upcoming events, quotes, links to articles, audio clips, books & bumper music.
- Quote: "Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes. And armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended. Its influence in dealing out offices, honors, and emoluments is multiplied; and all the means of seducing the minds, are added to those of subduing the force of the people. The same malignant aspect in republicanism may be traced in the inequality of fortunes, and the opportunities of fraud, growing out of a state of war ... and in the degeneracy of manners and morals, engendered by both. No nation could preserve its freedom in the midst of continual warfare." James Madison, April 20, 1795, which Thom discusses in his book, "We The People".
- Bush spoke of 9/11 as being the only attack on American soil, but the White House was set on fire when Madison was president.
- Plane crash. Bush started with 9/11, is this an omen, that the name of the first boat on the scene was the Thomas Jefferson?
- "Brunch with Bernie" with Senator Bernie Sanders, Independent of Vermont. Chinese curse, 'may you live in interesting times'. The media does not do a particularly good job informing people what goes on in Washington. Yesterday funding for TARP won, he voted against it because it was not specific, and we are not tackling the huge financial scandal. Barney Frank in the House says will try to insert it those sort of provisions, but it is too late for the TARP bill. The Bank of America wants more. There is the outrage of bailing out the people who caused the problem, yet we don't want the banking system to collapse, it's a huge issue.
Yesterday in the House Obey, chair of the House Appropriations Committee, released the stimulus document as passed by the House, it has to go through committee and the whole House, and a similar one through Senate. The Obama people had a lot of input into it. It's extremely exciting, begins the process of rebuilding America, of creating millions of good paying jobs, of addressing so many of the needs that Bush has ignored, energy efficiency, sustainable energy, rebuilding highways, bridges, rail systems, water systems, education, child care, health care. He's been working primarily on primary health care. Training the doctors and dentists and nurses needed for underserved areas. Community health centers. Extending unemployment benefits. Expanding food stamps. Helping states, cities and towns. He hopes this will be the beginning in a radical change in national priorities. Pay attention.
He's on several committees, so has been talking to Obama's nominees like Tom Daschl, who he thinks will play a good role even if he doesn't agree on everything. Every citizen should have healthcare, Tom is strong on prevention. Hearing for General Shinseki, nominee for secretary of veterans affairs, who should be strong. Steven Chu, nominee for Energy Secretary. Ken Salazar for Interior Secretary. Hilda Solis, Secretary of Labor, one of the strongest nominees, a true progressive. Arne Duncan for Secretary of Education.
Difference between Obama and Bush on bank oversight? Bernie think Obama will administer it better anyway. Make sure it never happens again. People need jobs, not tax credits. Obama campaigned on a tax breaks so is likely to carry them out. Young kids getting little recess, because of NCLB. We need more human-centered education policies. Bernie thinks Duncan understands that. Obese kids not exercising. A need to roll back the Bankruptcy law.
The pilot and attendants on the plane that crashed in the Hudson are union folks, and the union concerns itself with safety and training. They did a fantastic job. What if they gave every family their share of the bailout directly? Nobody knows what the total will be, and how much will be repaid. This bailout is the result of the most egregious financial crime in the history of humanity. It will be dear not only in terms of loss of jobs, healthcare, savings, educational opportunities. This is a real, real tragedy. He is not seeing the outrage, the holding of these tycoons responsible, or the reforms needed to prevent it happening again. The "too big to fail" doctrine. We have to be bold and break them up. The Fed has lent out trillions, too. We need to have far more oversight of the Fed, too.
Will it be the same as usual under Obama? Will we the people get a say? Bernie is independent because the Republicans are right wing and the Democrats are centrist. The Democrats are far superior to the Republicans. It will be like day and night, a hundred times better. George Bush would never have introduced a document like that new stimulus document, dealing with energy efficiency, sustainable energy, breaking our independence on foreign oil, dealing with global warming, education, healthcare.
The problem that Obama and the nation are going to have, which the media does not talk about, is the dynamic of lobbyists representing multimillion dollar corporations representing drug companies, insurance companies, coal companies, oil companies, the military industrial complex. They have enormous power. Will Obama be successful in passing progressive legislation against their opposition? The Employee Free Choice Act will come up in the next year; corporate America will spend tens of millions to fight it. The most significant part of Obama's campaign was the grass roots networks that he developed. Around 10 million people participated. He has the opportunity of mobilizing those people to help them pass progressive legislation. Our job is to push Obama and the others in a progressive direction.
Why can't we invoke the Patriot Act for fiscal terrorism, send them to Guantanamo and get them to tell us where everything is? We'd be in jail for taking much smaller amounts. The damage that these guys have done to millions and millions of people. Markets do go up and down, but this was a man made disaster. We can't be held hostage by Wall Street.
Bernie has such a fan club among listeners, they are so happy there's a politician who will take calls and speak truth to power. He loves the show because there is so much going on inside the Beltway that people are not aware of, bad and good. Congress does not communicate as well as it should.
A gay man has immigrated and integrated here, wants to be able to marry which he could never do back home. We have a badly broken immigration system. We have around 11 or 12 million immigrants here illegally. These people should not be thrown out, there has to be a process towards citizenship for them. Bernie voted against a bill yesterday which had a process because corporate America is trying to have guest worker programs which bring in cheap labor from abroad and lower wages for Americans, and he is adamantly against that. People should not be brought in when they are not needed. There will be a process. We give preferential treatment to refugees at risk of death. In some countries gays are executed, so include them? That's something to consider.
Can we prosecute the Secretary of the Treasury for the way he has been giving out the money? Is there anything we can do? Not prosecute, he is doing what he perceives to be necessary and that the situation now would have been a lot worse if he had not. Hank Paulson used to be the CEO of Goldman Sachs, and he is now giving them and the other financial institutions funds. Conflict of interest. We have got to fins the causes and hold the reckless, irresponsible crooks accountable. He is not hearing the outrage from Congress.
Where is the money coming from? Almost all of the economists now tell us the most pressing issue is to prevent a depression. Stop the increase in unemployment. It is preferable to increase the already high national debt than to have another Republican Great Depression which would take us years and years and years to claw our way out of.
- Bumper Music: People, Turn Around, Delta Spirit (video).
- The show will be live from Washington, DC Monday thru Thursday next week; Monday thru Wednesday at the radio row, Thursday from an unknown location. Tuesday Ron Reagan and Thom will anchor the coverage. You will hear the entire Obama inauguration and Obama's address, and Ron will anchor while Thom is returning to radio row, depending on timing and security.
- Bumper Music: Let the Day Begin, The Call.
- Guest: Ravi Batra, professor of economics at Southern Methodist University, Dallas. Author of "Greenspan's Fraud: How Two Decades of His Policies Have Undermined the Global Economy" and "The New Golden Age: The Coming Revolution against Political Corruption and Economic Chaos".
The economy: TARP, Stimulus, Citibank break-up, Bank of America asking for another serving. He said on a previous show that November, December, January would be dangerous. Half a million jobs a month lost, the stock market is going nowhere, they are wasting money on bailouts. $1.2tr deficit with no stimulus. They have handcuffed Obama from doing anything. Another $8bn will make it $2tr, it won't work and will raise interest rates. The world does not have that much money to lend the US any more because it has lost a lot of money too. Germany is running a deficit, increased their bailout, they had a bond auction recently and were unable to find buyers, so pulled it. The US could not pull a bond auction, they need the money.
The Chinese are talking about moving out of dollars. Bloomberg had an economist on from Hong Kong who said a US bond auction could fail within a year, which would cause a spike in interest rates and a crash of the dollar and the stock market. China does not have enough new, uncommitted money for further lending to the US. Their surplus is falling. They need to use it to buy fuel or stimulate their own economy. As a result he is not hopeful about the success of Obama's program.
Will this cause the dollar to crash and the price of commodities to explode, or interest rates to go up and a world wide depression create such a deflation that commodity prices crash along with everything else? He think the dollar will fall sharply but not crash as the fate of other countries is tied to it. The Yuan will be devalued so that China can continue to export. He thinks gold will stay high for another two years or so and then may crash. It depends on the policies that are followed. They are trying to paper over problems.
Recap of the problem: they never talk about supply and demand, they always talk about everything else but, for example saying that cutting taxes will create jobs. Why? Companies will hire more people only if they are selling more. They confuse people by not concentrating on the fundamentals. The main source of supply is productivity, the main source of demand is wages. For the past 30 years productivity has been rising very fast, thanks to the computer revolution, Internet and so on, but wages have been stagnant. So Greenspan and recent administrations came up with an artifact, creating more and more debt through excessive government spending and by bringing interest rates down so that people will be lured into more debt. The fruits of productivity rises went to the CEOs. It was great for them, and there were stock market bubbles and people thought the economy was great.
The fundamental solution is to increase wages right across the board, through policy or spending money. People may not spend tax cuts because they think they are temporary. Wages have to rise to catch up with productivity, and there is room to do so because profits are still high. The Bush administration told GLM to cut wages, lay off people to become competitive. It's the wrong medicine, and the Obama administration is doing the same thing. If you cut wages, demand will decrease and more people will be laid off.
At the same time the trade deficit has to be cut sharply, as that is connected to the low wages in the United States. Fix the dollar at a low rate with the Chinese and Japanese currencies and those of others with huge trade surpluses with us, rather than let it float. Would that cause the rest of the world to no longer use the dollar as a reserve currency and denominate oil and gold in dollars? The rest of the world cannot let the dollar fall too much because America is still the largest market for them. If gold goes up, fine, America will be able to export enough to pay for oil. The US is a $14-15 trillion a year economy, China ($3-4tr) just became the third largest economy behind Japan, with Germany close behind; the three combined are less than the US.
What is foreseeable for the youth coming up today, economically? The future is very, very bright, looking at historical cycles. People will be so fed up they will demand big changes at each election, including 2010. Bush woke us all up to the excesses of monopoly capitalism. Be active politically, do not suffer in silence.
The resolution of the September 14 2008 meeting in DC of the G20 said they wanted to reform the Bretton Woods system which originally adopted the gold standard, until 1973. Will they come up with a new required standard? Ravi thinks they will have to. The current system is very friendly to the CEO. Any time there is a problem, they print more money, bring interest rates down, create more debt and goods get sold while wages remain low and the CEO benefits. Most likely it will be a partial gold standard, maybe 20-45% gold. This will give flexibility to back up money circulation and to meet emergencies.
If not the dollar, what security? The European Community combined GDP is similar to that of the United States, but any country can back out of the Euro. That's why the dollar will not crash, though it will fall. Ravi thinks gold and silver will rise for a while, but not industrial commodities because people are afraid of inflation of currencies. Oil is a separate case, judging by cycles, and it could rise this year because of Middle East tensions, which will also contribute to the rise in gold.
China has bought up America's debt, can they call it in and destroy the country? No. The Fed can buy any bonds they sell with its own currency. But they may not be able to participate in bond auctions. If they dump their bonds on the market they will be shooting themselves in the foot, and the Fed can buy the bonds from them and give them more dollars, what will they do with them, apart from buy oil?
What can the average person do to protect themselves? According to historical cycles, he foresees that the rule of money will be gone in the United States and there will be a great economy, within the next 6 or 7 years.
Would it help to buy American goods? In theory, yes. Vicious circle. Because of the huge trade deficit, we are not making much in America and our wages are very low. So people have to look for cheap goods from other countries. If the trade deficit was cut, American wages would rise faster than prices, there will be more production here. So even if things are not as cheap as before, the living standard will rise, the purchasing power of wages will go up and that is what matters in the end.
We followed Alexander Hamilton's "Report On Manufactures" until the 1980s and the United States became the world's largest manufacturer and the most affluent economy. This ended with the supply side conspiracy which maximized CEO incomes and minimized wages. Supply side "economics" will be discarded.
Will other countries devalue? They all cannot devalue. The dollar will fall relative to other currencies.
- Bumper Music: Save The USA, Andrew Bayuk.
- Upcoming Event: Jan. 19 Washington DC. PDA "MLK Day Pre-Inaugural Tribute" 10p-12a at Busboys & Poets, Langston Hughes Room, 2021 14th St NW in DC...with Medea Benjamin, Jodie Evans, John Nichols, Donna Smith and Thom Hartmann plus Rep. Raul Grijalva, Rep. Jim McGovern and Tom Hayden.
- Upcoming Event: Jan. 18-22 Washington DC Radio Row, Obama Inaugural. The swearing in on Tuesday is scheduled for noon, the same time that the show goes live. Thom will be there and anchor it, and Ron Reagan will take over while Thom returns to radio row, and then they will discuss it. The show will feed the inauguration live without commercial breaks, though affiliates may handle it differently.
- Upcoming Event: February 26-27th