"RED MEAT" MYTH

Jane Brody, a long time skeptic on taking vitamins,
eagerly latches on to whatever propaganda is being
pedaled by the conventional "health" industry. She
is food and nutrition expert for the N. Y. T., and her
latest article (4/30/09), "Paying a Price for Loving
Red Meat" continues the fiction that eating that stuff
is bad for your health. For support she cites a couple
of large but scientifically questionable studies done
by prestigious organizations. The report is long, and
I'll refer you to her article if you are interested.

These studies purport to show that, sure enough, folks
in this country that eat lots of red meat are more likely
to suffer from both cancer and heart disease than people
who take it easy on the red stuff and eat more fish and
chicken. This is a shiny example of the fallacy post hoc,
ergo proper hoc (after that, therefore on account of that.)
Are these people just more risk tolerant than others?
What else do they eat? Are the chicken and fish eaters
risk averse, and more careful about their health in other
matters as well?

Here are some facts that suggest that Ms. Brody doesn't
have the full story: 1) The Masai, the Inuits, the Lap
Landers, the Moguls, and our own Plains Indians (before
Europeans came) are all people who thrived for centuries
on red meat diets, including lots of fat. Blubber was a ma-
jor part of Inuits' diet. Among all of those populations,
cancer and coronary heart disease were extremely rare
(before the w. m. showed up with Coca Cola and Hershey
bars.) Doesn't that suggest that maybe the latter, and
not the former, may be the problem? Maybe our red
meat eaters are careless about cokes and pastries as well?

2)Robert Adkins, M. D. went to France and discovered
that the French love real butter and eggs and cheese, and
eat lots of these, but have skinny women and half the
coronary heart disease that we do. He came home and
formulated the Adkins diet, which encourages people to
eat all the red meat and fat they want, but to radically cut
the carbs, especially refined ones. The average American
eats 150 lbs. of sugar a year, most of it in processed foods.
The obesity epidemic is actually a sugar-addiction epide-
mic. Obesity is, of course, connected to both cancer and
heart disease occurrences. The Adkins diet, incidentally,
is hard to stick to because of our addiction to carbs, but it
was thoroughly tested at both Duke and Stanford, and came
out with flying colors health wise. No increase in either
heart disease or cancer were tied to it. People lost weight
on it alright, but soon got tired of it. It is now out of fashion.

As for red meat, Ms. Brody forgot about one of the big
pluses from eating it. That would be "conjugated linoleic
acid (CLA)." That stuff is important in preventing cancer
(established in animal testing) as well as protecting from
coronary heart disease. It's an artery cleaner that breaks
down fat and escorts it out of the body. It's an emulsifier,
as is lecithin. Both of them reduce serum cholesterol.
Guess what is the best source of CLA? Red meat and milk
products from grass fed cows! A meaningful red meat
health test would use only grass fed beef, not that fattened
on grain, which has much less CLA.

So we have a lot to learn. But we won't get it evidently
from the conventional food business and their cheerleaders.
There are now thousands of well qualified practitioners of
"alternative medicine," who support the natural foods
movement, and warn against refined carbs and chemically
poisoned foods. One of them is William Campbell Douglass,
M. D., who publishes The Douglas Report. He writes:
"Starting in 1984, the famous Framingham Heart Study
tracked more than 5,000 adults for decades to find out
what causes heart disease. . . They found that men aged
30 to 55 were the ONLY group where it looked like high
cholesterol might be connected to heart disease. This is
incredible if you think about it. Among all the people
OLDER than 55 -- men and women -- there was NO
connection between high cholesterol and heart disease."
Dr. Douglass says a good steak is one of the healthiest
meals you can eat. Especially so if it comes from a grass
fed animal. He says hot dogs are good for you as well!
The sodium nitrite in them promotes blood flow. He
says our own bodies make the stuff, and "even small
doses of the chemical can TRIPLE your blood flow. That
may help prevent or even cure heart attacks, high blood
pressure and strokes." Who knew? (Besides Douglass.)

LYING TO THE M. C.

The M. C. is the middle class. Lying to them (us) is a
full-time occupation for defenders of the corrupt and
failing status quo. They know that change is coming,
and they desperately want to head it off before the
pass. While David Brooks dishonestly cherry-picks
various polls and studies to show that Americans
(supposedly) are satisfied with our economic system,
Glenn Beck can't decide whether we are being seduced
by socialism, or forced into fascism. He is too ignorant
evidently to understand what either of those is, or how
far we really are from those extremes. But extremes
make up his game. That's what he does.

Brooks, writing today in a N. Y. Times op. ed "Yanks in
Crisis," purports to be discussing something he calls "the
public mind." But what he is really talking about is how
he thinks people feel about things. How folks think and
how they feel are, of course, two very different things.
"People don't seem to feel as if they are sliding into a hole,"
he writes, "but neither do they feel secure." If you look
at the continuing rise in unemployment and foreclosures,
it's perfectly clear that we are sliding into a hole, regard-
less of how anyone feels about it. The banks are doing a
little better. How could they not, with the Fed. lending
them our money at zero interest, and them charging
credit card holders anywhere from 12.5% to 19% to 32%?

Mr. Brooks goes on to say: "The crisis has not sent Ameri-
cans running to the government for relief." Really? Which
Americans is he talking about? Has he heard of the auto
makers? Or AIG? Or Citi Group and the rest? How about
the increase in folks applying for food stamps and unemploy-
ment benefits? This is nonsense. There is simply no truth
in what he is saying. None at all!

Brooks refers to a Gallop poll that shows that 55% of Ameri-
cans said that government is the biggest threat to the coun-
try. This shows the success of the idiot chorus of Rush, Beck,
Hannity and O'Reilly, etc. drumming that blatant falsehood
into an uninformed and unthinking majority going back to
Reagan ism. Our government is a bigger threat than nukes
in the hands of N. Korea and Iran? A bigger threat than Is-
lamic radicalism? Big government didn't cause this econo-
mic mess we are in. It was ungoverned greed, deceit and
fraud coupled with stupidity in the investment sector that
drove our economy into the ditch. Weak government allow-
ed it, not strong government. (For a discussion of the false
market mythology of the Reagan years, see my last blog.)
For a factual historical explanation of how the public has
been misled into thinking "government is the problem,"
see What's the Matter with Kansas?, by Thomas Franks.
He explains how issues like "God, guns and gays" are
used skillfully to hoodwink people into sacrificing their
own best interests to support the predatory state run
by and for the big corporations.

An example of the crooked use of numbers by Brooks:
"When Gallup asked specifically about the current crisis,
44% of Americans said they disapprove of an expanded
role for government during the crisis; 39% said they
approve of an expanded role but want it reduced when
the crisis is over; and only 13% want to see a permanently
expanded role for government. See what he's doing? If
you add the 37% and the 13%, all of whom want expanded
government activity in the crisis, you get 52% for an
expanded gov't. role. That's a majority! And it's also
just the opposite of the point Brooks is trying to make.

Why is Fixed News (Fox Noise) so hostile to Europe?
Why are their false prophets lying about France and
Sweden in particular? I'll plan to take that up soon.

jgoodwin004@centurytel.net

MYTHS WE LIVE (AND GO BROKE) BY

Economists aren't known for humor, but the story of
the "Reagan revolution" is a real howler! Using the re-
ligious myth of all-seeing, all-knowing "market forces,"
the Reagan people sold the naive on deregulation and
"supply side economics." The latter had been correctly
labeled by Bush Sr. as "voo-doo economics." But when
he saw it was never-the-less popular, he went along
with the gag.

All religions have to contend with evil. Evils in the mar-
ket religion are taxes, regulation, and labor unions. The
latter are evil because they fight for a living wage. So
every effort is made by the market true believers to ba-
nish those curses from the land. Reagan ism openly and
proudly proclaimed unceasingly four major laws of their
weird economics: monetarism, supply-side economics
(including tax reduction to the max and deregulation),
balanced budgets, and free trade. It should come as no
surprise that Mr. Reagan, being a politician first and for-
most, openly and frequently violated all four of these
laws while continuing to proclaim his devotion to them.


Monetarism is the belief, now thoroughly discredited,
that a nation's money supply determines it's economic
health. Milton Friedman was its most ardent and influ-
ential advocate. But he came to minimize it late in his
life, admitting: "The use of quantity of money as a target
has not been a success . . . I'm not sure I would as of today
push it as hard as I once did." Economists have come to
understand it is interest rates (set by the Fed. Reserve)
that (along with consumer demand) drives the economy
more than money supply. Of course when the Feds drop
the interest rate to zero and nothing happens, that means
there is no economy left to drive.

Supply side is the belief that production of goods is what
brings prosperity. The more goods produced (supply),
the better the economy. The fatal flaw in this nonsense
is clearly seen in today's economic woes: if there are no
buyers (demand), production soon becomes over-produc-
tion and then stops. Car companies are going broke be-
cause broke people can't buy cars, and over-production
doesn't help! Instead of bailing out Wall Street, the govern-
ment should buy up the surplus new cars and raffle them
off, or give them away by lottery or something. Seriously!
Loaning money to car makers so they can continue to over-
produce isn't the answer. Insanity, you will recall, is repea-
ting the same behaviour and expecting a different result!

The Reaganites busted the unions as producers moved
their plants to anti-union states (these are mostly foreign
makers, by the way) or out of the country (to Canada and
Mexico mostly). Union membership today is less than
half what it was pre-Reagan. Families trying to make it on
low wages can't buy much beyond bare necessities. They
borrow on their homes to pay for health insurance or den-
tal work, and on their credit cards when all else fails. If
they are late on a payment, interest on their credit card
debt (which may already be at 19%) can go to 31 or 32%.
Health insurance for a family of four costs $12,000 a yr.
The number of people without health insurance is near-
ing 50 million! Most foreclosures are caused by
crushing health-related debts. That's the magic of the
free market at work when health services and insurance
are run for profit, making a few people very rich, and a
large part of the rest paupers. The CEOs of major HMOs
are paid $millions that come from the insureds premiums.
The premiums could be reduced if the inflated salaries
could be reduced. But you can't mess with the market: it's
sacred! The sky will fall if you interfere with the market!

Well, I hate to tell you, but it has already fallen on millions
of our pauperized citizens who paid as long as they could,
and then failed. Market magic lifts all yachts, and swamps
the row boats in their wake. It's your basic Social Darwin-
ism 101. Winners take all. Losers lose all. The big fish eat
the little fish. Here's how it works in the real world: In 1983
Alan Greenspan, then head of the Fed. Reserve, urged Con-
gress to raise the payroll tax in order to build up a surplus
and insure the stability of Social Security. The payroll tax
disproportionally effects low and mid-level earners. After
these working people paid higher rates for two decades and
built a healthy Social Security surplus, Greenspan endorsed
Bush's plan to use the surplus to pay for huge tax cuts for
our wealthiest people! And here's the kicker: after the cuts
have wiped out the surplus and left us record deficits, Mr.
Greenspan (no longer in govt.) has a solution. You guessed
it! He thinks we should cut Social Security benefits! Not
the tax cuts for the wealthy, mind you, but the rent and
grocery money for retired workers!

And Greenspan is not alone. In fact he is now a minor figure
in a formidable and growing movement that threatens to dis-
troy Social Security. William Greider explains it all in an
electrifying and well-argued report in The Nation (2/11/09):
"Looting Social Security." He finds "an impressive armada
is lined up to push the idea" that the government can recover
its bank bail-out costs by robbing the old folks at home. He
says that "leading think tanks, the prestige media, tax ex-
empt foundations, skillful propagandists posing as economic
experts, and a self-righteous billionaire is spending his for-
tune to save the nation from the elderly." There you have
it, sports fans. That's Social Darwinism in all its glory!
How do you like it? Let me hear from you!

jgoodwin004@centurytel.net

UNCHRISTIAN NATION

Folks who want to claim we are a Christian nation
usually base that claim on a false reading of the Foun-
ding Fathers' (FF) intentions. When Alexander Hamil-
ton was asked why there was no mention of God in the
Constitution, he jokingly said, "we forgot." But they
didn't of course: there was a heated debate over the
issue, and a strong consensus emerged that this would
be a thoroughly secular government, totally neutral on
religion.

The F. F.'s intentions become clear if one reads the 1797
Treaty of Tripoli (a Muslim state):

"As the Government of the United States . . . is not in any sense
founded on the Christian religion (emphasis mine) -- as
it has in itself no character of enmity against the laws, re-
ligion or tranquility of Musselmen -- and as the said States
never had entered into any war or act of hostility against
any Mehomitan nation, it is declared by the parties that no
pretext arising from religious opinions shall ever produce
an interruption of the harmony existing between the two
countries."

This document was endorsed by President John Adams
and Secretary of State Timothy Pickering. It was then
sent to the Senate for ratification; the vote was unanimous.
This was only the third unanimous vote in the Senate's
history, according to Brooke Allen (Moral Minority) to
whom I am indebted for most of this information on the FF.

So there you have it in black and white! The framers of
our government did not consider, nor did they intend that
this should be a Christian nation. John Adams "viewed with
dismay," according to Allen, the rise of religious fundamen-
talism. Adams was raised a Congregationalist, but in later
life worshipped with the Unitarians. The latter do not ac-
cept the divinity of Jesus, and therefor differ little in be-
lief from Judaism. Said Adams of the fundamentalists:
"Instead of the most enlightened people, I fear we Ameri-
cans shall soon have the characteristics of the silliest people
under heaven." What would he think if he were around
today and viewed the mischief wrought by the Rel. Right?

As for other FF, Franklin rejected the idea of a personal
God. He believed in an unknown and unknowable Almighty.
Like Jefferson, Madison and Adams, he believed Jesus was
a great moral teacher, but not divine. Washington was the
most tight-mouthed on religion of any of the FF. He re-
peatedly refused to declare himself, or affirm faith in Jesus
Christ. He attended church, as an example, but always left
before communion was celebrated. His speech writers al-
ways included religious pronouncements in his speeches,
and he always omitted them when he gave the speech. He
refused on his death bed to allow his pastor to pray with
him. Jefferson wrote of Washington: "He never, on any
occasion in his public life said a word that showed a belief
in the Christian religion." In several thousand letters W.
wrote, there is not one single mention of Jesus Christ, not
even as a great moral teacher. So Washington is a mystery
as to his religious beliefs. At the very least, we know for
sure that he was resolute in keeping religion out of govern-
ment.

Granted, our early colonies were very religious. Masse-
chusets and Virginia had state churches, making a church-
state union. They also were very intolerant. As Artemus
Ward observed: "The Puritans nobly fled from a land of
despotism to a land of freedom, where they could not only
enjoy their own freedom, but could prevent everybody
else from enjoying theirs." They ran Roger Williams out
of Mass. for preaching freedom of religion, and they hanged
three Quakers on Boston Commons for refusing to stop
preaching there.

No, sports fans, this has never been a Christian nation.
God was added to our money after the civil war, and to our
Pledge after WW II. War seem to make us feel guilty, so
we toss God a bone. And politicians, going all the way back
to Alexander Hamilton, love to use religious talk to awe,
mislead and manipulate the masses. 'Twas ever thus:
Seneca observed: "Religion is regarded by the common
people as true, by the wise as foolish, and by the rulers as
useful." Hamilton would have endorsed that wholeheartedly.

RELIGIOUS RIGHT: WRONG BATTLES?

The failure of the Religious Right (RR) to regulate
the country's sexual behaviour has not stopped them
from trying, but it is costing them in influence and
credibility. At their insistence we have spent nearly
$1 bn. promoting premarital abstinence. That's money
down a rat hole. There's simply no evidence that it
has any effect. And a lot of evidence it doesn't. As
Bristol Palin said, "that doesn't work." It's like beating
a dead horse (an apt simile for much that occupies the
RR).

The culture is celebrating sexual freedom in music, mo-
vies, TV, literature and other media. They are all ex-
tolling sexual pleasure, as is the kids' peer culture. And
all are screaming, "do it!" They are doing it. Forty per
cent of nation's babies are born to single women. The
Bible Belt states that most promote abstinence also have
the highest rates of teen pregnancy. And the most oppo-
sition to effective sex ed. in the schools.

So the RR is losing that battle. They have failed also in a
long-running battle to ban abortion. They have lost the
battle on stem cell research, and will soon give up on ban-
ning same sex marriage.

The Bush years made possible by the devoted support of
the RR have been wasted years for that constituency. And
thanks to them, wasted years for the country as well.
Wasted for a threatened and steadily degrading environ-
ment, and for the lost years of deteriorating neglected infra-
structure, mounting federal debt, failing education, failing
health care delivery, lost time in stem cell research, the
probably fatal deterioration of the Israel/Palestine situa-
tion, the destruction of Iraq for no discoverable reason,
wasted time and futile efforts in Afghanistan and on and on
with lost time to end our dependence on foreign oil, and to
address global warming.

All this and much more during the disastrous reign of the
Bush-Cheney regime and their RR enablers. And for what?
James Dobson has admitted that for them, the big cultural
battles have all been lost. As Kathleen Parker wrote in WaPO
(4/5/09), "Pragmatically speaking, the Christian coalition of
cultural crusaders didn't work." In other words, they sold
their birthright for a mess of rotten political pottage. Too
harsh? How about Pat Robertson's endorsement of Rudy
Giuliani for president? Rudy is pro-choice and marched in
a gay parade. He openly lived with his mistress while still
married to his second (or third?) wife. How's that for family
values?

"Is the Christian right finished as a political entity? Or, more
to the point, are principled Christians finished with politics?"
Thus begins Kathleen Parker's piece in WaPo cited above, en-
titled "Political Pullback For the Christian Right?" We can
hope the answers to her questions are "yes" and "no."

Church people should not attempt, by law, to regulate the
sex lives of their neighbors. That violates the Golden Rule.
They wouldn't want anyone regulating their private behaviour.
That's unchristian, and as we have seen, doesn't work. Chris-
tians should, however, support laws that are communitarian
(seek the common good) or, in the words of our Constitution,
"promote the general welfare." I'll return to this theme in a
later discussion.

For comments, the correct e-mail is:
jgoodwin004@centurytel.net

WORRYING ABOUT THE GRANDCHILDREN

Some of the Republicans are alarmed all of a sudden
about the huge and growing federal debt. These are
the folks urging more and deeper tax cuts also. They
voted for huge tax cuts under Mr. Bush while running
our national debt over $10 trillion! Joseph Stiglitz,
formerly chief economist for the World Bank, has toted
up the costs for our Iraq misadventure as approaching
$3 trillion and counting.

Now they are showing all the zeal of new converts in
their concern for "fiscal responsibility." They have
completely forgotten their past sins. Their plea now
is to consider what the mountain of debt will mean for
the future. Sen. Gregg says the Obama budget will
"devastate future economic opportunities for our chil-
dren and grandchildren." Sen. Mc Cain calls it "genera-
tional theft."

Yes, there has been wasteful spending, for sure. The
Iraq debacle has been money and lives down a rat hole.
The same for "star wars," the unworkable missle de-
fense fiasco that has wasted billions. And we keep
building aircraft carriers, submarines, and models of
fighter planes that are redundant, and unneeded.

The real "generational theft" that will "devastate future
economic opportunies for our children and grandchildren"
are the tragic and criminal neglect of our infrastructure,
environment, education and health delivery systems. The
"deferred maintenance" on roads, bridges, dams -- all
public facilities in fact -- has happened on the watch of
these frugal freddies who hate spending on anything but
weapons and earmarks. They have brought the nation
to the verge of ruin by sheer neglect! That's how much
they really care about our kids and their kids.

Felix Rohatyn has written a powerful, much-needed book
called Bold Endeavors. In it he tells "How Our Govern-
ment Built America, And Why It Must Rebuild Now." He
shows how government investment during and following
the Great Depression put millions of people to work on
roads, dams, conservation, and public buildings that be-
came national assets of great and lasting value. There's
good spending and bad spending. President Eisenhower
had to fight his own Republican Party to build the Inter-
State Highway system. Can you imagine where we would
be today without it? The American Legion fought hard to
get the G. I. Bill through a Congress that was initially
opposed to it. Peter Drucker has said that the G. I. Bill
did more than any other factor to bring the great prosperity
that followed WW II. It elevated a whole generation into
the professions and the educated middle class, and helped
millions of people buy their first homes. That's gov't spen-
ding that counts!

What kind of country have the spending haters left us
with? Says Felix Rohatyn (in the work cited): "The nation
is falling apart -- literally. America's roads and bridges,
schools and hospitals, airports and railways, ports and dams,
waterlines and air-control systems -- the country's entire
infrastructure -- is rapidly and dangerously deteriorating."
Care about your grandchildren? This is what you should be
thinking about.

Consider these facts, urges Rohatyn: "In a report issued in
2005 the statistics compiled by the American Society of
Civil Engineers (ASCE) document a grim story, and predict
a dangerous future. Twenty-seven percent of the nation's
590,750 bridges, for example, are 'structurally deficient or
functionally obsolete'; repairing these conditions would cost
$9.4 billion a year over the next twenty years."

Water facilities need an $11 billion annual investment. $268
billion will be needed to restore schools. Congested roads
cause motorists to spend 3.5 billion hours in traffic each
year at a cost of $63.2 billion in wasted time and fuel. "Over
the next five years," says Rohatyn, "to bring America's in-
frastructure to reasonably safe standards will require a $1.6
trillion investment." Those kinds of investments produce
lasting assets to everyone's benefit, including our children
and grandchildren.

Yes the growing national debt is a huge concern. Nancy
Folbre, a professor of economics at the Univ. of Mass. wrote
an op. ed. column in the NYT (4/2/09) entitled "The Gran-
daddy State." In it she notes that the Congressional Budget
Office has projected that government debt held by the pub-
lic will rise from 42% of GDP in 2008 to 82% in 2019. She
says that in 1946, right after the end of WW II, debt held
by the public represented 109% of GDP. "Borrowing that
money helped us escape the Depression and win the war,
laying the foundation for a long postwar boom. Of course,
that doesn't necessarily mean that economic growth will
resume for us." Prof. Folbre points out that "borrowing
creates assets as well as liabilities -- and future genera-
tions will inherit both. It's the relationship between assets
and liabilities that matters most."

THE WISE ECONOMISTS (Cont'd)

In the last blog I discussed some views
that are shared by Paul Krugman, Joseph
Stiglitz and Simon Johnson regarding the
Geinther plan for restoring the banks. Here I
am continuing to quote from Johnson's fine
article in The Atlantic, "The Quiet Coup:"
"At the root of the banks' problems are the
large losses they have undoubtedly taken on
their securities and loan portfolios. But they
don't want to recognize the full extent of their
losses, because that would likely expose them
as insolvent." (Let me insert here that Krugman
calls these banks "zombies" [dead men walking].)
And these include some of the nation's largest
banks. Back to Johnson: "So they talk down the
problem, and ask for handouts that aren't enough
to make them healthy (again, they can't reveal the
size of the handouts that would be necessary for
that), but are enough to keep them upright a little
longer. This behaviour is corrosive: unhealthy
banks either don't lend (hoarding money to shore
up reserves) or they make desperate gambles on
high-risk loans and investments that could pay off
big, but probably won't pay off at all. In either case,
the economy suffers further, and as it does, bank
assets themselves continue to deteriorate -- crea-
ting a highly destructive vicious cycle."

"To break this cycle," says Johnson, "the goverment
must force the banks to acknowledge the scale of
their problems. As the IMF understands (and as the
U.S. government itself insisted to multiple emerging
market countries in the past), the most direct way to
do this is nationalization. Instead, Treasury is trying
to negotiate bailouts bank by bank, and behaving as
if the banks hold all the cards -- contorting the terms
of each deal to minimize government ownership
while forswearing government influence over bank
strategy or operations. Under these conditions,
cleaning up bank balance sheets is impossible."

Joseph Stiglitz, in a NYT op. ed. today expresses
many of the same opinions we have heard here
from Simon Johnson. In a masterful explanation
of the actual $ and non-sense figures in the Geith-
ner plan, he writes: "The main problem is not a lack
of liquidity. If it were, then a far simpler program
would work: just provide the funds without loan
guaranties. The real issue is that the banks made
bad loans in a bubble and were highly leveraged.
They have lost their capital, and the capital has to
be replaced. Paying fair market values for the assets
will not work. Only by overpaying for the assets will
the banks be adequately recapitalized. But overpay-
ing for the assets simply shifts the losses to the gov-
ernment. In other words, the Geithner plan works
only if and when the taxpayer loses big time."

Stiglitz agrees with Johnson and Krugman that the
quickest, cheapest, and most efficient way to get
these zombie banks going again is to nationalize
them (temporarily) to clean up the mess. Regard-
ing this, he writes: "Some Americans are afraid that
the government might temporarily 'nationalize'
the banks, but that option would be preferable to
the Geithner plan. After all, the F.D.I.C. has taken
control of failing banks before, and done it well. It
has even nationalized large institutions like Conti-
nental Illinois (taken over in 1984, back in private
hands a few years later), and Washington Mutual
(seized last September, and immediately resold)."

But, says Stiglitz, "What the Obama administration
is doing is far worse than nationalization: it is er-
satz capitalism, privatizing of gains and the sociali-
zing of losses. It is a 'partnership' in which one
partner robs the other. And such partnerships --
with the private sector in control -- have perverse
incentives, worse even than the ones that got us
into this mess."

"So what is the appeal of a proposal like this," he
asks? Perhaps it's the kind of Rube Goldberg de-
vice that Wall Street loves -- clever, complex and
nontransparent, allowing huge transfers of wealth
to the financial markets. It has allowed the admini-
stration to avoid going back to Congress to ask for
the money needed to fix our banks, and it provided
a way to avoid nationalization. But we are already
suffering from a crisis in confidence. When the high
costs of the administration's plan become apparent,
confidence will be eroded further. At that point the
task of recreating a vibrant financial sector, and re-
suscitating the economy, will be even harder."

It is easy to see why Wall Street likes the Geithner
plan, and why the stock market has responded as
well. Dean Baker writes in the Huffington Post
(3/31/09): "Oh, by the way, some people will get
very rich off the Geithner plan. Some hedge fund
and equity fund managers could make hundreds
of millions or even billions off the Geithner plan.
And under current law, they will pay a lower tax
rate on this money than a schoolteacher or fire-
fighter. Are you sold yet? One other outcome of
the Geithner plan is that the folks who bankrupted
their banks and wrecked the economy will be able
to continue to earn multi-million dollar salaries.
Of course this is necessary, because who else has
the skills to run these banks, other than the people
who drove them into bankruptcy?"

Let me know what you think!

Correct e-mail: jgoodwin004@centurytel.net

THREE ECONOMICS WISE MEN AGREE:

THE GEITHNER PLAN STINKS

Two of the three, Paul Krugman and Joseph Stiglitz
are Nobel Prize winning economists. The third, Simon
Johnson, is an economics prof. at M. I. T. and was, for
several years, head economist for the International
Monetary Fund (IMF). He has written a dynamite
analysis of the bank situation and it's best bet for a
cure in the May, 2009 Atlantic. (I urge you to get it
and read it on the Internet.) It's a masterpiece of
clarity and logic on an arcane but vitally important
subject. Clearly these guys are not light-weights, and
they do offer solutions, contrary to Geithner's charge
that no one has come forward with alternatives to his
plan.

Here's Johnson (from the article cited above): "In a fi-
nancial panic, the government must respond with both
speed and overwhelming force. The root problem is un-
certainty -- in our case, uncertainty about whether the
major banks have sufficient assets to cover their liabilities.
Half measures combined with wishful thinking and a wait-
and-see attitude cannot overcome this uncertainty. And
the longer the response takes, the longer the uncertainty
will stymie the flow of credit, sap consumer confidence,
and cripple the economy -- ultimately making the prob-
lem much harder to solve. Yet the principal characteris-
tics of the government's response to the financial crisis
have been delay, lack of transparency, and an unwilling-
ness to upset the financial sector." (On this, Johnson
echos Krugman and Stiglitz, both of whom have said
repeatedly that foot-dragging at this stage can be fatal.)

" . . . A whole generation of policy makers has been mes-
merized by Wall Street," continues Johnson, "always and
utterly convinced that whatever the banks said was true.
Alan Greenspan's pronouncements in favor of unregulated
financial markets are well known. Yet Greenspan was
hardly alone. This is what Ben Bernanke, the man who
succeeded him, said in 2000: 'The management of market
risk and credit risk has become increasingly sophisticated.
. . . Banking organizations of all sizes have made substantial
strides over the past decades in their ability to measure
and manage risks.'"

"Of course, this was mostly an illusion," Johnson goes on:
"Regulators, legislators, and academics almost all assumed
that the managers of these banks knew what they were
doing. In retrospect, they didn't. AIG's Financial Products
division, for instance, made $2.5 billion in pretax profits in
2005, largely by selling under priced insurance on complex,
poorly understood securities. Often described as 'picking
up nickels in front of a steamroller,' this strategy is profit-
able in ordinary years, and catastrophic in bad ones. As of
last fall, AIG had outstanding insurance on more than $400
billion in securities. To date, the U.S. government, in an
effort to rescue the company, has committed about $180
billion in investments and loans to cover the losses that
AIG's sophisticated risk modeling had said were virtually
impossible."

Noting that the U.S., in its financial ineptitude is coming to
resemble a banana republic in its response to the crisis,
Johnson says: ". . . But there's a deeper and more distur-
bing similarity: elite business interests -- financiers, in the
case of the U.S. -- played a central role in creating the cri-
sis, making ever-larger gambles, with the implicit backing
of the government, until the inevitable collapse. More
alarming, they are now using their influence to prevent
precisely the sorts of reforms that are needed, and fast,
to pull the economy out of its nosedive. The government
seems helpless, or unwilling, to act against them."

Continuing in the same article (it's a long one), Johson
writes under the sub-head "THE WAY OUT" that:
"Looking just at the financial crisis (and leaving aside
some problems from the larger economy), we face at
least two major, interrelated problems. The first is a
desperately ill banking sector that threatens to choke
off any incipient recovery that the fiscal stimulus might
generate. The second is a political balance of power
that gives the financial sector a veto over public policy,
even as that sector loses popular support."

TO BE CONTINUED

My correct e-mail: jgoodwin004@centurytel.net