How Should We Respond To The Imploding Economy?

Are We Facing Just Another Market Problem or A System Collapse?

Boston, July 28, 2008: The question we face in late July, as regulators seize two more banks, is: Will we be engulfed by a further collapse in our economy or can the damage be contained, or, even turned around?

We know what goes up must come down, but when will what’s down go back up?

It isn’t looking good — and, even now, the two presumptive major party presidential candidates are talking about everything but this deepening crisis. They are debating terrorists and Afghanistan and how to meander out of Iraq, but not the reality that so many Americans are living with: a squeeze that is leaving so many of us broke, in deeper and deeper debt and disgusted.

Until now, the doom and gloomsters were mostly to be found in the margins, in financial blogs or in the campaigns of Ron Paul, Ralph Nader or the Greens. The mainstream media has been looking the other way and mostly downplaying the unfolding disaster. Even as foreclosures double, and the price of gas and food rises sharply, it’s been business as usual on the business pages, and among the liberal political pundits who would rather debate the cover of the New Yorker than the growing desperation of so many Americans.

The Congress finally passed a housing bill a year into the crisis with most of the money allocated to try to shore up two housing agencies with more than a half a trillion in housing assets. The markets are melting down with more major stocks tanking, banks writing off still more billions, and unemployment rising.

People in the know, like George Soros, are saying this is the worst financial crisis since the depression. Others fear another depression. This pessimism has reached Newsweek, a guardian of conventional wisdom, which now says “It’s Worse Than You Think,” writing:

“This downturn is likely to last longer than the eight-month-long recession of 2001. While the U.S. financial system processes popped stock bubbles quickly, it has always taken longer to hack through the overhang of bad debt. The head winds that drove the economy into this dead calm - a housing and credit crisis, and rising energy and food prices - have strengthened rather than let up in recent months. To aggravate matters, the twin crises that dominate the financial news - a credit crunch and the global commodity boom - are blunting the stimulus efforts.”

We have two challenges: understanding the gravity of what is threatening us, and then discussing what could or should be done. We might also want to think about what the press should be reporting and what policy makers should be proposing.

On the foreclosure crisis, for example, I was just in Washington for five days with NACA, the Neighborhood Assistance Corporation of America, which took over a major hotel and set up a shop to counsel at risk home owners and advocate for affordable loans.

The Washington Post, based just across the street from the lines of some 20,000 people seeking help, did not cover it until it was over. But, to their credit, when they did they recognized that this effort by a not for profit citizens group was more effective in responding to the crisis than all the government agencies put together.

Writes Post Business columnist Steven Pearlstein:

“They came by plane and train, car and subway, starting before dawn and continuing late into the night, all of them clutching tattered folders and envelopes stuffed with the documentary evidence of their financial hardship and miscalculation.

It was striking how well-organized and executed it all was. Outside, there were plenty of volunteers and staff — 350 were flown in from around the country — doling out information, advice and sympathy to those waiting in line. …

In the space of 30 to 60 minutes, the well-trained, upbeat counselors managed to win the trust of their new clients, wring promises of a more frugal lifestyle and enter into their computers the relevant financial details. At a push of a button, NACA’s underwriting system declared how much the client could afford in monthly mortgage payments, and automatically requested the mortgage servicing company to modify the loan accordingly. Depending on the service and the loan, the answer might be available in a matter of days or even hours. In about half the cases, the result is likely to be a below-market, fixed-rate loan with hundreds of dollars cut from their monthly payments.”

So here’s one example of what can be done by an economic justice organization fusing services and advocacy. This all happened three blocks from the White House. While federal regulators visited, none of the progressive DC think tanks or even unions showed up in solidarity, even though AFL-CIO headquarters is a block away.

Individuals need help, but we all need change. Are we dealing with just another market mistake, the latest bubble gone bust in a volatile business cycle, or a straining system on the verge of breakdown? Can we solve all this with an Alka-Seltzer-like infusion of new taxes or regulations?

Or, is Gerry Gold, economics editor of the UK’s A World to Win, right when he argues, “The urgency of building a movement to replace capital, not to rescue it, cannot be overstated. This will mean a major program extending social ownership to all sectors of the economy, ending the distribution of profits to shareholders, and replacing the system of selling labor for wages with collective decision-making about the distribution of an organization’s income.”

Pie in the sky? Or is the sky really falling, made worse by global warming, wars without end, and resource depletion? If Obama or McCain are to “fix” what’s broken, they better start talking about it. And once they inevitably do, will either one of them, once elected, be able to overcome Congressional inertia and the power of corporate/finance industry lobbies?

If the rest of us see what’s coming, we better speak up too. Remember, when you see something, say something? It’s also time to do more than talk.

– Mediachannel’s News Dissector Danny Schechter has written PLUNDER (Cosimo). (newsdissector.com/Plunder) a new book investigating our economic calamity, and made the film IN DEBT WE TRUST (indebtwetrust.com) Comments to Dissector@mediachannel.org

VIDEO: See Danny Schechter in Washington:

Congress helps banks, but what about homeowners?

Popularity: 1% [?]

BJ - do you believe in God? Why? You’ve seen no proof of it.

You don’t have to see proof of a thing to see its results or consequences. I know I won’t convince you global warming is real - your conservative masters have you well-trained (deny global warming, bash Al Gore and question his altruistic motives) but hopefully you’ll at least think.

Now… my question to you is, what did the global warming rant have to do with your other Republican talking point - that one being that Americans are at fault for their own problems and they should just suck it up? What did the two have to do with each other?

Dany:

As usual you don’t have a clue, just fan flames.
It is not Bush’s bail out , its your damn demagogs , you know the jack asses.
Imploding economy , really?
Oh just FYI the worst prez of all time is easily Jimmy Carter, or don’t you remember 14 % inflation and a fake gas crunch , you are probably not old enough, we know you slept in school. And ya what the last guy said.

I love it when the truly stupid attempt to comment. Several perfect examples here. Why do you bother reading these stories if you have no intention of comprehending them? Does the headline not give you a clue? Does the fact that this is what you may consider to be a “liberal” web site not deter you from clicking the link? Did your God not warn you in advance? Was your “Master” perhaps napping when you clicked the mouse? Though critical thinking may not be your forte, try it some time and realize that a incoherent criticism is not a comment. You might also consider giving up the Kool-Aid it’s obviously destroying what brain cells the lot of you may have remaining.

I apologize for having to waste everyone’s time by having to deal with these schmoes.

Thank you once again Danny for an informative story.

Dumbing down has worked a treat. Things won’t get better because “those in charge” don’t want them to get better. Besides how you gonna get the jobs back that have been sold abroad. You’ve had it GOOD America for a long long time but you went to sleep and “they” got greedy and it seems your getting what “comes around”. Stolen from right under your TV watching noses. Here’s hoping. The rest of the world is shaking it’s head. But then again you wouldn’t we aware of that.

Danny,

You’re hysterical, and, worse– out of focus!!
Try saying something new — and constructive

Isn’t it interesting how an attempt at a discussion of a structural problem, of what’s happening to our economic system and to so many Americans irrespective of party, gets turned by some into being “hysterical,” or partisan, or “stupid” or unfocused, or its all our fault because we spend too much –everything but the issues I am discussing, issues that appear in financial news and blogs every day, issues with origins in Wall Street greed, a lack of regulation, a compliant media etc. There seem to be too many people who are addicted to their prejudices and parochialism, who only want to read what they think they know….

I talk about an effort by an organization that served 20,000 people with concrete help and am then denounced for not being “constructive.” I am told to be positive as the country slips into recession and perhaps worse…OMG. Comment by all means but at least comment on what I am writing, not what are so eager to ventilate about

Hocus Focus

bj - sorry for taking so long to reply to this. You may not be here anymore, but I’ll try anyway…

Posted on 28 Jul 2008 at 5:45 pm by bj

To: Zog The Obvious

>Because the article brought up the global warming issue which is headed up by Al Gore. If there is an issue with the globe and its warming, what about over population, etc., etc.

Zog: This is indeed a problem, one that I would be happy to see legislated. However, your “Be Fruitful and Multiply” pals over at Religion Central would be all too happy to squash any legislation to regulate breeding.

> We could go on forever. Have you given up your gasmobile?

Nope. But any trips I take, I try to get folks to go with me and contribute gas. I’m very aware of my gas usage, TY very much. How about you?

> Do you ride a bike to work?

Yep. When I don’t have to drop my daughter off at Day Care.

> Take public transporation?

Nope. I have a perfectly good bicycle. (See Above.)

> Read by candle light?

No…. SOME energy usage is okay. This is the freakin’ 21st Century, isn’t it?

> Drink milk, eat cheese? Want to see cows in the zoo?

um…. yes, yes, and no. I’m afraid you’ve lost me there. In all seriousness, could you please clarify your point?

>Every single person I know who complains of global warming are the worst violators of their own complaints and the biggest overspenders on homes, cars, and other energy sucking material toys.

‘cept for one…. :)

> Look at Mr. Gore as a great example.

Okay… he offsets his carbon use with Green methods. Research it if you like, it’s my bedtime so I’m not going digging now. But since you provided no real backup for your “example” I don’t feel too bad for copping out other than to say I’ll stack Al Gore’s energy usage against Bush’s or McCain’s any day.

> My only Master is Jesus Christ.

Good for you! I’m not a religious person myself, but I have nothing but the highest respect for those who have found and are happy with their own spiritual path. I read the Bible cover-to-cover, and didn’t find enlightenment. Rest assured, I continue to seek it, for I am convinced that we didn’t just “happen” but I’m also convinced that any Human writings on the subject are just that: “Human” writings.

> Perhaps if you believed in God and read the bible you would understand a little more about global warming. All these issues have been in the Bible for 2,000 years. Good grief. Sorry to have offended your liberal self.

As I said, I’ve read the Bible. The Old Testament is a series of moral messages that are worth living by without accepting the word-by-word account as doctrine.

The New Testament reads like Tweedle Dee and Tweedle Tum and - again, while its morality is sound (in most cases; we won’t discuss Leviticus) again, its word-by-word doctrine is questionable.

As to offending my Liberal Self… heheh. One of the things most conservatives don’t understand about Liberals is that we are willing to accept that folks have a different viewpoint from our own. I may not agree with you, but I will fight to the death for your right to say what you believe in… as long as I can voice my opinions as well.

Our country’s biggest problem is its unwillingness to embrace the idea that everyone has a different viewpoint. I’m sorry to say that Conservatives have a far greater problem with this ideal than LLiberals do. Once we accept the idea that we are all different yet can find a way to meet in the middle, our anger at each other will subside.

But I don’t know if we are mature enough as a species. This little fact by itslef is why I’m seriously considering ditching my Liberal websites and going back to burying my head in the sand like my peers.

*Shrug*