Monday, August 29, 2011

Seven Suns for Seven Sisters

The fantasy novel "The Silent Sphere" is set in a pocket cosmos which runs on natural philosophy, rather than on physics. It is akin to the 15th through 17th centuries, when even ordinary physical actions required the intercession of angels and demons. Kepler, for example, thought that angels guided the planets in their orbits, and his laws were the reflection of the mind of god, not of an inverse square attractive force. Writers of the time would report clouds of demons thick in the night, and earlier microscope drawings have little men folded up in sperm. It was that kind of world in the just barely post-medieval mind in Europe. Superstition was growing among all levels of society.

So, this is a cosmos which actually works that way: if someone were to look at a speck of dust they would see small demons pushing it back and forth to produce Brownian motion. Spontaneous generation – works. The fixed stars, really are fixed, attached to a distant sphere.

In this cosmos are imprisoned 14 deities: 7 male gods in the suns, and 7 female goddesses that rule the planets, which are approximately 800km in diameter, but hollow so that they have both inside and outside lands. The movements of the spheres are complicated by there being a series of intersecting paths, and gods and goddesses that want to be close will do multiple loops through the the orbit, which only takes weeks. Their obsession is to produce conjunctions where they can enthuse, that is inhabit, a mortal body and pair. These pairings lead to moons being born out of the sphere, and several of these already exist.

The general level of technology is between the 15th and early 18th century, with alchemy, not chemistry, as the true path to understanding reactions. They have fire-arms, though not so well done as to have truly ended the lance charge, or the primacy of hand to hand fighting. Each of the spheres mirrors earth cultures, but, for reasons that are going to be explained later, they do not necessarily match the peoples on earth who have them.

Thus this is a "powderpunk" universe, with gears, loose combustion, early mechanics and metallurgy, stabs at calculus and computing, but, as yet, still before the fully coherent program which would be started by Newton: to explain the world in deterministic and material terms. In this case, because it can't be done.

The novel opens when on of the spheres, Korana, goes silent, and is blotted by a black haze. From the then nearest sphere, Eowilonwey, an expedition is mounted to find out what has happened...

Creating Author Facebook Page

It is here.

Free Advice, Worth Every Penny

But consider what the professional kind got us...

Dean Baker on why the rules of the game are more important than trying to fix it at the end.

Monday, August 22, 2011

On the Libyan Revolution

American was born of violent revolution, and one might even say revolutions. Residents of the Massachusetts Bay Colony and what would be Vermont had largely thrown off Royalist rule in a series of pustches against local officials in 1773-74. There were already restive uprisings before then, dating into the 1600's. To be against violence is impossible as an American, because one must be in favor, at least, of receiving stolen goods.

Our age worships the word "revolution" and its derivatives, in my spam filter are a dozen revolutions, with operators standing by for my order. The space saver bag seems to be the most persistent.

It is a very debased coin, in the same way that the Victorians worship of "natural," in the middle of a technological and social construction of artificiality was debased, and it has beneath it a contradiction. Sex is the drive that concerns nature, because leaving behind descendents with recombined DNA is the means by which variation spreads through a population, and populations evolve. To worship nature, and to worship romantic love, as the Victorians did, is to worship reproduction. However, the Victorians had to link reproduction to economic and social control, because they were at, or beyond, their own ability to support their own population and produce the concentration of wealth required to expand their power and position.

In our time, to worship revolution, is to worship what produces it: anger, resentment, rage, dislocation, heedlessness for personal consequences. And yet, we, as a society, abhor all of these things. A run of the mill Hollywood thriller has crimes in it which would get the lead characters shot without trial. We link revolution, to refer back to my spam filter, to economics. Revolution then, is not revolution, but the attempt of some group of people to position themselves more favorably among the hierarchy of wealth. That is to say, we have turned revolution into etiquette, and our approve revolutionary activities consists of those not far different from paying the brain tax to a copyright holder at a stadium concert. When the revolution comes, building luxury skybox capable sports stadiums and filling them, will not be the priority. And yet we act as if the 1960's happened because MLK got on the stage with JFK and Ghandi to play a set at Woodstock, and the war ended.

The roots of revolution are, similarly, a murky melange at best. In general, high inflation is one of them, as people can no longer simply pull into subsistence, as their meager store of exchange is depleted. This is larger than you think, because inflation is that tax that no man need collect, and which finds every untapped store of funds. It is that tax that is is impossible to evade, the tax which is surer than almost any other. Food inflation leads to hunger and discontent, particularly among populations that have been stuffed with calories to promote stability. Where there is subsidized bread, there is a revolution crushed under the weight of grain.

So it was in France in the 1780's, where day laborers ate subsidized bread, until the regime decided it could not afford it, and so it was in Egypt where a subsidized bread system covered much, though less and less, of the population. I point out that one did not see fat demonstrators in Egypt, but their upper classes, are quite well fed, to the point of being obese. As early as 1981 a memo in the US pointed out that Egypt's problem was managing foreign exchange, and therefore the government should reduce subsidies for food to the lowest point equal to maintaining order. The same was true of other "social welfare" policies, including the child health insurance system, which excluded half the population because they did not attend state schools. The architecture of soft repression, is laid out by Harvard graduates and public health school professors.

So it was in Libya.

Earlier this year, the realization came to the Obama administration that what Bush had attempted to do by brute force, and what they were failing to do by brute force, might be more efficiently accomplished by support from afar. It was a realization that many had come to before: that modern air war could, in fact, support the toppling of governments that were repressive and unpopular, so long as, of course, there was some sort of revolutionary movement willing to actually do the work of regime change. This had the advantage from our point of view, that it was self-limiting: without a movement that could actually charge the steps of the Presidential Palace, however numbly there would be no intervention, since bombs cannot run a country. Note that bombing, but itself, does nothing other than kill people and waste capital: without a human social force on the ground, one can dump bombs on, for example, Hanoi, and not change more than the captains of the anti-aircraft batteries.

The administration also realized that it could not get support from its own party, which is equivocal on almost all use of force, nor from the opposition, which reserves the right to use force to Presidents of its own party. The Republicans are Republicans first, and at this point, Americans not at all. Democrats rally around a war President, Republicans rally around a Republican war President. Politics continues from the water's edge, and goes round the world at this point.

Thus, unconstitutionally, but pragmatically, they went to war by bombing. They delayed and stonewalled Congress, became involved in debt fights and other domestic issues, and continued that air campaign. The air campaign revealed the horrible weakness that a decade of occupation of Iraq and Afghanistan had wrought. Our own allies asked for American planes not to be involved, so bad was their marksmanship and fire discipline. Run ragged by virtually 10 years of non-stop use and abuse, our fighter bombers were less effective than they had been in the air war over Iraq 8 years ago. Instead, the focus shifted to missiles, and drones, close air support and some amount of, again illegal, ground presence by American troops.

This makeshift war policy, which had the brokered support of the Europeans, particularly the French and the British, was, at first, an abject disaster. The rebellion had alread flared in Tripoli, and utterly failed to secure its objectives. The introduction of NATO force was, then on the peripheries of the Libyan state, without funds, without popular backing, and without trained fighters. It was essentially a series of clan rebellions gathered under one flag. The first months of the air campaign were, more or less, devoted to preventing them from being destroyed by Libyan tanks and air power.

The crucial turning point, however, was not military, but internal: a military leader, who was in the employ of the regime, was shot. From there the progress of the rebellion became remarkably quick, especially when the external steps of closing off the regime's money supply were completed. Internal unity, and external interdiction turned military disaster, with fighting wobbling at the edge of the oil infrastructure, into a rapid drive to the center. A losing war was won, but not by military power first.

So there it is: a revolution, bastard in any sense, with a government that is likely to be fractured. However, the key sources of catastrophe in Iraq are not there: there is no US presence to be a massive fountain of corruption to fight over, there are no preferred outcomes. Libya, such as it is, belongs largely to the Libyans. For as long as they can keep it.

And this is the reality, that while the removal of the regime is accomplished, replacing it with another is far less likely, and will not be aided by bombs. For the reflexively anti-war, it should be, but will not be, a lesson. That lesson is that violence works, and to always and everywhere oppose violence, is to always and everywhere support it. It should more specifically be a lesson to the anti-war left. The left, virtually all of it, is in favor of a looser money policy. This means more oil and food inflation, and therefore, more situations like Libya, or Syria now. More times and places where we have already intervened, where the left already supports a bombing mission: namely Ben Bernanke dropping helicopters filled with dollars on them. Having already intervened, and having already supported intervention that leads to hunger and violence, for the left to then say that it is not in favor of other violence is logically and morally inconsistent. It is saying that we want to outsource the violence that our polity requires to others, so that we can benefit from the jobs that a hotter monetary policy creates. The anti-war right has not such logical quandry: they favor depression now, depression tomorrow, depression forever, which will, at least, reduce the pressures of inflation drive revolution. There is an advantage to being wrong, in that logical consistency is easier to maintain once you admit that you care not for the welfare of anyone in the name of ideology.

The lesson for the left then is that opposition to small winnable wars is used as proof for engaging in large, unwinnable wars. The lesson is that there is no moral absolute stance against violence, unless you, personally, are willing to kill yourself now, as the beneficiary of 500 years of genocide in the Americas. The lesson is that if such wars are not dealt with constitutionally and legally, they will be dealt with unconstitutionally, and illegally.

Tuesday, August 9, 2011

On the rioting in London

On Thursday, the police shot a man. He was a bad man, and he had a gun. But he did not fire it, according to the evidence.

On Friday, the police lied about it. They told the tale that he had shot first.

On Saturday the riots began.

On Monday, the left rose up with one voice, to condemn the riots. It would be like people at the sinking of the Titanic in life boats organizing an anti-swimming demonstration. Why can't the lower orders just die as they are supposed to?

What is happening in London is not yobbery or hooliganism. These people are prepared. They are wearing masks, they are carrying tools. There are thousands of them. It is not like the Vancouver riot over a hockey team's failure to win the Stanley Cup. It was not a "riot against corporate failure." This is an insurrection, incoherent, unclear, unable to assume power, but as clearly, it is a political act. These rioters are prepared, they have broken kettling tactics, they have beaten back riot police. Whether they can continue is doubtful on this round. But there will be a next, and a next, and a next, because the very austerity

The current left is irrelevant, precisely because its first gesture, is to join with the powerful, in condemning it. It shows that the leadership of the current left is, in fact, on the side of oppression, so long as their own place in that oppression is more reasonable. One can see this from larger issues, but this shows that it is a deeply rooted, deeply seated moral identification with power and the profits of pillaging the world and slapping down the poor. To tell the poor that they should wait for the wheels of law to turn is to insult their intelligence. Anyone with any intelligence knows that the law does not work: the police sell information to Rupert Murdoch, and beat people for filming the police beating people, and only an editor has faced the dock, none of the principals will. No one from the bank meltdown has gone to jail. Or ever will. Only people who are comfortable in their place, can say that it is a moral imperative to wait on a legal system which is manifestly corrupt beyond all redemption. Where the courts are criminals, there is no justice.

The riots are not, of course, some great sign of immediately coming hope. Riots and insurrection are common through history, and most come to an ignominious end. Even large rebellions, such as the insurrection against the British East India Company, or the Boxer Rebellion, are put to an end. The best most insurrections can hope for, is to tie their oppressing state in knots, forcing it to spend ever escalating amounts on unaffordable and unattainable security. Al-Qaeda's goal was to do this to the West, and it seems to have worked: the west now spends a trillion dollars a year on wars and security that it cannot afford, but will not stop.

The moral hollowness of the left, however, is my topic here, because it is the key and final failure. We should expect those who hold the gates of commerce to want to extract vast tolls from their control of them. We should expect princes born to wealth to suck the riches of the world into their playgrounds in Dubai. This is their nature. However, the corruption of the left is not of its nature, and it is proof that the present discourse, the present economy, the present society, is going to burn, in a much larger magnification of London burning. The problem is that the present left is a conservative force, which is dedicated to keeping their part of the profits of privilege. They are not the oppressed, but functionaries in the more global extraction of wealth, and they merely want a better deal from the very corporations that they have erected. Lower debit card fees and better protections against their insurance companies. No windmills that might hurt their property values.

In short, a moral void which, none the less, passes moral judgments.

That a generation that has a million excuses for itself, for its leaders, whose discourse consists of bellowing those excuses, I read a dozen for Obama every day from so called members of the left. They have an excuse for plunging the world in to the next wave of economic depression, but not for young people rioting. They sneer with supercilious contempt about how the young have not been "paying attention." That is their generic all purpose excuse for failure: if only everyone had been more supportive of them, all would be well. If even one dirty ungrateful lesser person isn't on board, then that weakness is enough to destroy the essential unity. Or something. It is the same argument leveled during the Iraq War about not supporting the mission. The reality is different: if you think that paying attention accomplishes anything, you have not been paying attention.

This high handed moralizing from Generation Fail, is rich. No generation that I can find in history has both such a record of continuous and pervasive fucking up, and so elevated a narcissism. To read us on us, you would think that Shakespeare, Dante, and Li Po would be humiliated in our glorious radiance. You would think that Lincoln, Elizabeth I, Napoleon, and Roosevelt would be in tears at our magnificent accomplishments. It is the sadness of this generation, that so many ungrateful people do not seem to recognize what awe inspiring greatness stand before them. We handed out a Nobel Peace Prize to a President who had done nothing but take inauguration and bail out the banks. This, alone, should measure the distance between our discourse and our reality.

Or something.

But look back more broadly. Take for, example the American record of "reform" in the last generation. We have had reform of the Food and Drug Administration, Accounting Regulations, the Budget Process, the Campaign Finance System, the Welfare System. And as a result, fewer drugs are approved today than before, Sarbannes-Oxley did nothing to prevent the largest accounting fraud in history, there is now unlimited soft money in American politics, and the poverty rate is higher, and the US was just downgraded for its bloated budget deficit.

In short, the American political system, is completely incapable of "reforming" anything to good effect.

So, while you, Generation Fail, look down on the rioters, realize this: history looks down on you. You came to power with the Soviet Union collapsing, and only internal troubles of the organization of power at hand. You leave with your cities burning, your economy collapsing, and a series of manifestly criminal institutions in charge. You have given away the right to vote. You have erected a spy state. And you apologize for a President who has advanced all of this. Americans have fewer democratic rights than before. Less wealth.

You are generation fail, precisely because you judge everything by how you feel about it, and therefore, about how you can deny your culpability. You are spectators then to history, and if you do not like how it is playing out, realize that you wrote the script.

Realize that your own heroes are foreign to you. Bob Dylan wrote a song about a man who might, or might not, be a murderer, but was certainly not in a good place. Labor Unions defended people who threw bombs. The very fabric of your myth is that Ghandi and MLK played a set at Woodstock, and the War Ended with the Black People voting. This is now a caricature to the point of dishonesty, and the rioters in the street, they are going to bomb your Church of Capitulation.

You don't even have the technocratic convictions of the people who created your movement. In the 1900-1950 period, a liberal would look at the riots, and not blame the rioters, who are, after all, products of their environment, but instead would have pointed out that this was the inevitable result of cuts, incarceration, and corruption. They would have advised spending a great deal of money to improve the objective conditions of the people who might otherwise riot, and bring them hope.

You shit on them. You don't even have the empathy of a soulless technocrat, but instead think "my apartment! it could be burning!" In this, you believe precisely the same thing, as President Assad of Syria. And so, are headed in the same direction.

The rioters are showing the very first signs of an uprising: they can strike, cause damage, and force response, and then disappear back into the population. It is a very long way from this to anything, but they have already gotten more attention from the powerful than their so called peaceful counterparts. Anarchy is loose on the world. It is strange to have people quote Shelley approvingly, not realizing that he was in favor of violent revolution and anarchism. It is strange to hear them quote approvingly Lincoln, who oversaw a war. Or look back on any number of violent revolutions.

But that is the disconnect, as soon as facts are pointed out, Generation Fail says "I won't change my mind." This means, inevitably, that people's brains are going to be blown out, because the essential requirement for all peaceful discourse, is that you must be willing to change your mind, about any belief, no matter how precious. As soon as you begin talking in absolutes about what you demand to participate, then you make inevitable a violent and bloody end to matters.

Since you, Generation Fail, refuse to change your minds, you assure, that people are going to have their brains blown out.

Monday, August 8, 2011

On a day like today

If you are reading this, congratulate yourself for stumbling across an obscure corner of the internet where truth is spoken. Not truth as in the repetition of slogans concocted by some powerful interest to be repeated by human spam, but truth. So read carefully, because your time is running short.

What you are witnessing right now is the failure of an ideology. That ideology is that heroic free market creatives should run the world. But why this ideology exists as a potent political force, and why it came to power, is what most people don't get. So let me explain: the Red Queen's Race.

In every economy, there are some goods that are the ultimate basis of production. Once these are known, all struggles become out either controlling the root of these resources, or being able to employ them. People institute government and economic systems to distribute these essential resources. This continues until there is a disruption which can achieve the same or better results, with different resources. Iron replaced bronze, for example, not because early iron was better than early bronze, but because it was more plentiful, and not limited by a few outcroppings of tin. Then some users of iron found ways of making better machines of war, and the result was the Assyrian Empire, which lived fast, burned hot, and died young and ugly. Disruptions generally occur when one group has a resource, and discovers how to employ it, or discovers a resource which it did not know it had. America discovered oil in effect, and learned how to employ it. Thus America disrupted the coal based world, because the British, who had coal, had to stick their necks very far out to get oil. So too did the Germans. The winners of the Second World War, were the two nations both distant from the origins of the conflict, who had oil: the USA, and the USSR.

But under the equilibrium, there is a basic cycle between controllers of these key resources, who by and large are not good at employing them, since they spend all their time controlling them, and employers of the resources, who by and large are have burned through their native stock. That is now: America has burned through most of its native stock of oil.

Oil is by far not the only key resource, however it is a poster child for the situation, because oil is the most extreme of the resources, others include rare earths, and certain ores.

The key to resource extraction versus resource employment is that resource extraction does not require very many well developed people to make money. Where as, employment of resources does. Thus it is possible to create a resource state with very few stakeholders.

However, it is not possible to have a prosperous society. Someone someone where, needs to live well. If there are two few stake holders, at some point they consume all the luxuries they can take, and they must spend money on power. And power is a bottomless vacuum. This is how oligarchies fall: either they burn out on luxury, and become decadent, or they go on endless wars of conquest and internal struggles of repression. Or perhaps both, when decadent princes try their hand at failed wars.

It is not mandatory, many resource states are, in fact, very egalitarian, because egalitarianism is the other solution set to an economic situation where one form of activity is much better than all the others: the wealth is shared, to prevent the have nots from breaking the haves. The haves often hire people to break the have nots, in hopes of getting to a very unequal society.

An unequal resource society is said to have the "Dutch Disease," because it hollows out the rest of society. Everyone is attached to the resource, or works for those who are. Nothing else matters, nothing else makes enough of a profit.

The mirror image of the resource state, is the financial state. It too is a product of the same action. The only activities which are as profitable as extracting an unsubstitutable resource are vices, and finance. Each for the same reason: people are willing to pay much more for them than they cost to produce. The finance state mediates the consumption of the key resource, and collects virtually all the profit. This, in a phrase, is the Red Queen's Race: a small group of low stake holder resource extractors, for example, the American South and cotton, and a small group of financiers who turn their society into a model of the resource extractors. Each advance in economic well being in the finance state, brings more money to the hands of the resource creators, who then raise prices. The finance state's job is to temporize: create paper wealth so that the resource states will not buy them up, find a substitute for the resource, often by conquest, and find luxury goods to sell to the resource state, that being the only thing the resource state really wants to import.

The key weakness of the resource state is that its stake holders do not want to develop, because a larger industrial base cuts into their power, and into the profitability of their resource extraction. Competition for labor increases costs, and the live by keeping costs down.

As I alluded to above the economic conflict between the American South, and the American North, and indeed the American South and the British Empire, was of a resource economy against increasingly financialized economies. The British Empire loaned money to the South for purchase of manufactured luxuries. The South, rather than buying or building equipment, bought luxury. It is not that the South was without native industrialism: the cotton gin, the first quality iron forges, American hard porcelain all came from parts of the South. New Orleans had comparable financial power to any Northern city. The South, had it not had the Dutch Disease, could have been on equal footing with the North in industrialization.

Our own Red Queen's Race was first over oil primarily. In 1970, the US began importing oil on net, and the swing exporters were in the Middle East. This was a painful, but manageable, Red Queen's Race, because while oil is highly profitable, the weakness of many of the producers is that they cannot shift to something else, and, by their own design, do not have other industries. Thus the financial state needs to regulate the speed of the economy for long enough to implode the resource state, often in a war. This is how, in our case, conservatism came to power: the only way to regulate oil demand, in the US, is by throwing people out of work.

Liberalism has an abhorrence of throwing people out of work for reasons other than cyclical inflation. However, the Red Queen's Race created a source of inflation that was outside of the control of the liberal state: namely in the hands of the resource states. These states were willing to buy American capital, because they did not want their own public's developing, and say, overthrowing them. Americans took the money and developed, not their own economy, but other, subsidiary economies, to keep wages and oil use down.

This was the paper for oil economy: the US created more and more exotic financial devices to sell to the oilarchies, which, in turn, acted as the world's demand central bank: selling for less when they had to, and for more when they could, but with Saudi Arabia there to prevent runaway greed, and to spike attempts to get off oil, since the Saudis were becoming major stakeholders. Your dealer is willing to give you credit, to buy more drugs.

In the US, Reagan, and in the UK, Thatcher, however saw a problem. In the liberal state, money is spread out over the whole society. Productivity goes up, everyone gets richer. This was LBJ's "A rising tide lifts all boats." However, the problem was that the smaller boats consumed, that ultimately became oil demand, and the large boats had to constantly bid against the oilarchs, who remember had virtually all of the profits from their society to spend, after paying for a military, for control of developed world capital. In the late 1970's it seemed like arabs were buying up everything, there were even jokes about it on late night TV.

So Reagan and Thatcher began the process of making the US and UK economies a mirror of the Saudis. All money flows to the top, the people at the top are tax exempt, and they bid against the oilarchs for control. Because the American economy is vastly larger than the resource economies, this is, remember the weakness of the resource economy, this change proceeded in stages. Tax rates went up for the poor: for example raising FICA taxes in 1983, as they went down for the rich, for example the Reagan tax cut package of 1981. Wages did not collapse all at once, instead, they stayed largely the same, with only a fraction of the improvements becoming available to consumers. Privatization was essential: because government bonds are sold with low interest rates and no risk, but private paper can vanish at any time. This is how financial economies hope to blunt being bought out: by selling paper that goes poof, and managing the paper for the resource economies. In the American South, there was not one financial exchange of any consequence, nor any global bank of any consequence, they used London.

Americans for their part were happy with this, even with grumbling, because for some life got better, for most it stayed the same, and they could convince themselves that the people who were being pushed out were bad people. And because for a generation, they lived much better materially than they deserved: they sold paper, which was almost costless to produce on the scale of the total economy, and got oil and other resources. It seemed like a good racket.

But during this time every single feature of the Saudi state, became a fixture of the American state. This included imprisonment on a vast scale, a gradually bloated military, increasing religious fundamentalism funded by the wealthy elite, and a de-democratization of the country. This is one of the problems of a red queen's race: all the wealth, and therefore all of the investment decisions, are in the hands of fewer and fewer people, but also the system grows more financially unstable, so the more control the wealthy have, the more they need. I've mentioned Hyman Minsky before but this goes well beyond his analysis, since he did not look at the resource spiral.

The Thatcher-Reagan thesis was: let them buy our paper, so long as our rich stay ahead of their rich. Don't believe me, believe Jude Wanninski, who wrote "How the World Works." However, one generation's hack for time, is the next generation's ideology. Jude did not entirely believe in what he said about the wealthy and the creative class, but the people who came after him had no such doubts. Labor was trash, only the people who managed the money mattered.

This brings us to Clinton. Clinton accepted the Red Queen's Race, and accepted Bob Rubin's addition to it: namely that if the United States could reduce its budget deficit, then those seeking returns and absolute safety would have to turn to Wall Street and the big investment banks for it.

This is crucial: risk free investments pay much less than you would expect. The unwillingness to take any risk whatsoever is very costly. Since the oilarchs learned that paper can go poof, they started demanding paper that would not go poof, and that was US Treasuries. Rubin's idea is once they had bought all the treasuries, the oilarchs would need some other form of supposedly risk free paper. That source, was the American mortgage market, and the key was to tear down the wall between investment banking, which sold products, and commercial banking, which held the mortgage loans. Securitization was the process of turning diverse mortgages, into bonds that could be blessed as "risk free." However rapidly the amount of truly risk free cash flow, that is the revenues that would always be there to pay the bonds every quarter, was used up, and so more and more exotic means were used to bullshit investors into thinking that they were buying risk free paper, when, in fact, they were not. Standard and Poors, of today's downgrade, was one of the entities that blessed the risky paper as risk free.

Clinton also accepted the idea that we could engage in labor arbitrage: ship jobs out of the US to places where less oil was consumed by ordinary workers, but control the profits. Find companies willing to work for less. In the end, that meant China, which, you will note, is not part of NAFTA. The real collapse of Clinton's trade policy was not shipping jobs out, but failure to understand the resulting internet bubble gold rush. It seemed like a thing to be encouraged: paper that would go poof, leaving the oil hear, and effectively lowering the price of oil. Oil hit $19/barrel. That is 1/4 of what it is today, and 1/7 of its peak.

Clinton's mistake, blunders really, were on doubling down in 1998 with the repeal of Glass Steagal, and and the failure to raise tax rates to prevent people from fleeing the market. The second mistake was political, not economic: leaving a nominal surplus. Glass Steagal was the wall between commercial and investment banking, out it went. Euphoria was everywhere, and "Dow 36,000 was a slogan." This time, it was different.

The Rubin dollar drought policy was to do the following: create a shortage of dollars, this would mean that those who had dollar denominated debts, which was almost everyone, had to export to the US. This would hold down costs not only of oil, but of manufactured goods in general, and of wages in the US. Americans could not work for more than Wal*Mart could buy from China, and Wal*Mart set prices in every market it entered, often by being allowed to violate the law flagrantly in development, wages, and working conditions. The costs of inexpensive goods from China were used to cut prices on everything else. In the old days this kind of predatory pricing would have been illegal, and stopped, under a variety of laws that dated from the 1890's and 1900's. Clinton, the Democrat, was economically to the right, of McKinley, a Republican elected in 1896. Wal*Mart's control of wholesale and retail trade was, by 1999, one of the few key drivers of American productivity. Economist Solow joked: the rates they made were peanuts, but as the biggest player in the two largest sectors of the American economy, that was an awful lot of peanuts.

Thus when there was a dollar drought, the US would step in, print dollars to "bail out" the temporarily trapped country, make a profit when things recovered, and then go back to squeezing. Essentially, it meant everyone was under pressure all the time, but any place that blew up would be bailed out, however, often with hard conditions attached. This, was the Washington Consensus. The target, was Russia, the great swing producer of resources. If Russia had to sell gold and oil and anything else at whatever price they could get, then it would depress resource prices. For about 4 years, the liberal economy of cheap resources attached to real wage gains returned. It was the best 4 years that most of you will ever seen in your lives.

Then, it blew up. The Down stopped making real upward progress, and the various leveraged schemes to produce fake risk free paper started quivering. Then the NASDAQ tanked, swooning from 5000 to 2000. The three years from 2000-2002 were the most sustained contraction of the financial markets, since the outbreak of World War II. But even as it was coming, the Red Queen's Race had another card to play.

That card was this: both the resource rich, and the developed world rich had doubled and tripled and more on the stock market. Even by November of 2000, the pain was enormous, because the leveraging doubled and more the losses. They needed, needed, to bail themselves out. However, their candidate was not all that good, people still felt good about the Democratic Party, and it was coming close.

So they stole the election.

Let me repeat that: they stole the election. George W. Bush did not get more legal votes in Florida in 2000 than Al Gore. This is not a supposition, it is, in fact, legally true. The Republican Party stipulated to, in criminal proceedings, to enough misdeeds to swing the election, including hand filling out missing absentee ballots. However, they could not have stolen the election if the Democratic Party, and Al Gore in particular, had not allowed them to. In the ultimate irony, President of the Senate Al Gore ruled that Al Gore, Presidential candidate, would not get a hearing.

What could it hurt? Well, everything. And not in a very short time.

But, I must return to my regular work. The Dow is off 3.59% as I post it, and tomorrow will be another bad day, so there is plenty of time to explain what Bush did, and what Obama did, and then draw some economic and political conclusions.

So why should you read? Because I wrote in 2001 that Bush would bail out the rich with tax cuts, and the poor with a housing bubble, the housing bubble would collapse, taking the economy with it, producing a massive recession. That is, I predicted this. In 2001 I told people that Ben Bernanke would be the next Chair of the Fed, because his life's work was how to prevent a liberal moment in an economic downturn like this. However, because of pure incompetence, that recession was larger than even what I, a noted pessimist, thought possible, in part, because the left went from being a coherent critique of the Red Queen's Race, to a racist fan club. Yes, racist. But that's for tomorrow.