Then and Now: 2007-2017

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December 21, 2017—Ten years ago this month, I was journalling about the economy, on the eve of the 2008 financial meltdown that is now referred to as the ‘Great Recession.”  On a philosophical level, I was deliberating about “free market capitalism.” My definition differs from the standard one, as I believe ultimately “capitalism” is an individual thing, in that the individual uses the wealth between her ears, in her “caput” to generate enough to survive. 

 

Capitalism, in my view, is not about the soulless corporate amalgams of human protoplasm devoted solely to bottom line profits. No.  A capitalist worthy of the name is self-directed, self-motivated, individual, and scorns government favoritism.  Thus, to me, the US “economy” which serves the aggregate, works against the individual, who is only oppressed by government spending, debt, and money exporters, and is not served by government policies to “stimulate the economy.”

 

The following are some journal excerpts from that time:

 

ON THE SUB-PRIME HOUSING MELTDOWN

 

Friday, December 28, 2007 – My friend Louis wants to blame the borrowers who are losing their homes in the sub-prime mortgage meltdown.   He represents the prevailing opinion among the TV-educated, the corporate advertisers’ version of current events.  I didn’t explain well to Louis why his assessment is unfair.

 

I imagine a typical would-be sub-prime buyer.  He’s an immature, overeager dreamer, with stars in his eyes, at the mercy of realtor, developer or home owner, banker and lawyer, all bent on selling this house to the first poor slob they can drag in, because they are all overextended and staggering under overhead.  They gang up on him, paint rosy pictures, feed into his dreams, rubber stamp the loan applications, hedge on getting credit reports and down payments, and otherwise abdicate fiduciary responsibility.

 

Joe Buyer, who can barely read and write, because we depend on the government to educate children, signs contracts nobody understands, created that way intentionally to confuse and intimidate the naïve buyer.  

 

At the closing, everyone in the room except Joe knows he is being set up.  If anything bad happens, he is out on the street, minus his down payment, if he made one, and maybe in more debt than the house is worth.

 

But the realtor/developer/home seller, banker and lawyer have no reason to care.  They get their money up front, no-risk cash, and they can walk away and spend their earnings that night.  The banker sells Joe Buyer’s loan to a bigger shark upriver, along with as many other similar deals as possible.

 

Joe Buyer, who believes he has bought a home, when he has only bought a falsely inflated mortgage, now proudly holds the keys to the biggest debt trap of his life.  He is fixing to see why, when the bottom drops out of a saturated market and banks are still charging yesterday’s interest on yesterday’s property values.  I don’t blame him for walking away.  Write it off as mass education in market forces.

 

Meanwhile, all the banks are doing this all over the country, as are all the rest of the sharks, as fast as they can process the loan applications.  So, when too many Joe Buyers start walking away from their mortgages, the banks are left holding the tangible assets in other states, because that electronic paperwork has traveled to New York through a number of middle men and other bunglers . . . er . . . bundlers, who each got a cut of Joe’s future earnings.  Now a New York megabank holds Joe Buyer’s mortgage in its computer-bank, along with thousands of others more or less like his.

 

The New York megabanks would be up a creek by now, if they didn’t have the federal government to bail them out.  They now own thousands of empty houses, and they are responsible for property taxes, safety, maintenance, insurance, and other expenses that should be profits.  This displeases the Fed, which has bought all the megabanks and the federal government with electronic money, so ultimately owns all these tangible assets that nobody can afford to keep.

 

Poor Fed.  May it get what it deserves.

 

TAX LAW

 

Thursday, December 27, 2007 – If Congress can practice medicine, I can write law.  In a free, capitalistic democracy, there would be no Congress.  Taxpayers would be shareholders, each with a binding vote on the government budget, and they would only pay taxes on services they wanted.

 

I’ve noticed there is almost no information in standard places about tax law.  I checked book stores and library.  My accountant is suspiciously silent on this most widespread and generally accepted practice of extorting money from people in order to boss them around.

 

What’s the big secret?  That the income tax is unconstitutional, immoral, and unethical?  What changed between 1895, when the US Supreme Court declared the income tax unconstitutional, and 1913, when Congress re-instituted it to provide a perpetual feed to the newly formed Federal Reserve?

 

It is not the free market capitalist’s job to support the self-ordained moralists in Congress, who presume they have a right to obligate my future for my health, wealth, and welfare.

 

Taxpayers who are willing to pay for their own enslavement do not deserve freedom.

 

ODE TO THE US CONGRESS

 

Thursday, December 27, 2007 – As self-proclaimed overseer of every human endeavor and master of none except getting something for nothing, the US Congress presumes to socially engineer America and the world into a better tomorrow.

 

The legislation regarding incandescent light bulbs symbolizes Congress’ attempt to turn out the lights and return to the Dark Ages.  It’s the latest best reason to abolish Congress.  Our hired bosses need to get out of the engineering and agriculture businesses.  They need to quit engineering global warming with every stroke of legislation that insures quick, election-year profits and long term disasters.

 

They need to get out of the technology-promotion business, the debt-promotion business, the auto and energy promotion business, and the self-promotion business if they want to save themselves from irrelevance and expendability.  They have lost credit and credibility with taxpayers, and their promises are coming due.

Comments

The Burghal Hidage Added Dec 21, 2017 - 12:13pm
....and some things never change :)
George N Romey Added Dec 21, 2017 - 1:26pm
Good article Katharine. When big business teams up with big government the little guy should watch his backside. He’s the dupe in 
all of it.
Ari Silverstein Added Dec 21, 2017 - 4:18pm
“He represents the prevailing opinion among the TV-educated, the corporate advertisers’ version of current events.”
 
Your assessment of prevailing opinion is dead wrong.  Bankers and financial institutions were routinely blamed for what happened with very little blame going to those that didn’t honor the written terms of the contract they signed.  In fact, you echo that prevailing opinion to a T.  Wasn’t it Obama that coined the term “banksters?”  I’d love for you to produce one article by a prominent journalist that blamed borrowers. 
 
I think it’s high time you stop looking for someone to blame. Since the beginning of markets, recessions have been natural events.  There will be another housing correction and like clockwork the people will blame the banks.  I think we should all rise above the finger pointing and enact policies that don’t add fuel to the fire.  By way of example, Fannie Mae is guaranteeing as many mortgages now as they did at the height of the housing collapse.  Let’s get the government out of housing. 
George N Romey Added Dec 21, 2017 - 6:26pm
Ari it’s management’s job to look out for shareholders. Lending to borrowers not capable of repaying the loans they signed isn’t fulfilling their obligation. Particularly in an industry that is key to a healthy economy. 
 
Lucky for the bankers shareholders the US taxpayer via Bush and Obama came to the rescue.
Katharine Otto Added Dec 21, 2017 - 8:29pm
Ari,
We obviously see things differently.  Later I plan to write about the circumstances surrounding the passage of the Federal Reserve Act just after the income tax in 1913.  It created the Fed as a private banking institution--in violation of the Constitution, which gave control of the money to Congress--after the income tax was passed, also in direct violation of the Constitution, which prohibited direct taxation.  The result was it put Congress in the debt creation business, which is why national debt and deficit are out of control.  
 
You can call that blaming the banks if you want, but I say the "blame" lies with Congress and with freshman president Woodrow Wilson, who was seduced by bankers JP Morgan and John D. Rockefeller into creating a vehicle for backing Morgan's loans to England for the brewing WWI, and which ultimately got us into that war.
Katharine Otto Added Dec 21, 2017 - 8:30pm
George,
Thanks, as always, for your support.  I would add the military to that pair of thugs you mention, because it's all predicated on the military's keeping the little guy subdued.
Katharine Otto Added Dec 21, 2017 - 8:32pm
Burghal,
Well, we grow older, if we're lucky.  At the moment, I still don't know of a planet I would rather live on.
Robin the red breasted songster Added Dec 22, 2017 - 2:47am
Caveat Emptor  ... let the buyer beware, is perhaps a good principal for a capitalist world.   It works well for most things.
 
However there are some things which the average man in the street is not equipped to judge logically.    He simply does not have the technical knowledge to do so.   Indeed, for all of us, there is something like that.
 
Take choosing a dentist.   I don't know enough about dental science and its practice to judge the technical skill of a potential choice.   So, unconsciously, I chose based on totally irrelevant things such as whether the receptionist looks neat and tidy.  We can't help ourselves.
 
So when it comes to financial "products" most of us are putty in the salesman's hands.
 
Neither, by the way, do we have enough time to evaluate most of the decisions we make each day.   Our brain does them automatically.    To do otherwise takes a lot of effort and we tend to find it "boring" if we try.   Skilled marketing and sales people know how to influence this process.   I know, I did...
 
Actually very few people, even in the finance "industry" actually understood some of these "products".  It is no wonder that there was a meltdown.
Mark Hunter Added Dec 22, 2017 - 3:10am
Well said! Sadly, no one has learned any lessons from this over the intervening years.
Neelon Crawford Added Dec 22, 2017 - 3:59am
I second Ari's request for a single article whereby the author offered the theory the borrowers are to blame for the financial collapse.  
Eileen de Bruin Added Dec 22, 2017 - 6:16am
Katharine, this is brilliantly written and encapsulates the truth, most sincerely and almost without irony. It is the truth.
 
The principles of which Robin describes is exactly correct.  Buyer beware is neither enough nor a way to run a government which pretends democracy and caring for its people.
 
You need to be in Congress Katharine, but I know from my own experience that they would have weeded you out of the political game and spewed you away long ago.
 
Shame on the US government and banks and its raison d’etre to visit woe and violence and criminality upon its people by keeping them under educated, well fed with media lies and propaganda and as cannon fodder for their wars.  It it time for a civil war of minds and hearts
George N Romey Added Dec 22, 2017 - 7:57am
Katharine the problem with the Fed is that it’s there to bailout large banks that make bad decisions. It’s like a rich parent that continues to pay for an out of control son or daughter-think Paris Hilton. And sure as it will rain in Miami during the summer time there will be another round of bailouts.
 
Citicorp the poster child of arrogant and irresponsible management had been bailed out before and of course no one ever went to jail.
 
And yes the MIC should certainly be added to the list of thugs in expensive suits with fancy college degrees.
Robin the red breasted songster Added Dec 22, 2017 - 8:39am
The biggest sea change in the UK, in recent times, in the relationship between the ruling classes (i.e. those with money and influence) and the rest of us, occurred because of the Second World War.
 
There was a popular feeling at the time that Britain defied the might of Nazi Germany and its numerous allies "alone".  (Actually we had the Empire behind us as one cartoon of the time pointed out  "Yes we are alone... said the caption... all 500 Million of us).   Everyone felt that "we are all in it together".    Hospitals could not charge people in the war who had been injured during it.   Those who were made homeless had to be looked after.
 
When the war ended, Britain faced years of shortages and austerity.  The popular feeling was that we were "still in it all together" and things could not go back to the way that they had been before the war.   This is why Winston Churchill lost the election and a Government was ushered in which brought in universal health care and education "free at the point of need"(all the way through college if you could pass the exams).  Those who first benefited from these changes powered the creative revolution that was the sixties.
 
As a direct result, although class still exists, it hardly matters any longer.  We are all well educated (if we want to be) and have good health care.    The result of this is that we are more difficult to fool, and more difficult to control, than we used to be.   The old establishment doesn't like this one little bit and would, if it could, get the genie back into the bottle.
 
So you see a continued and well funded campaign for hearts and minds to try and convince us that health and education should once again be in private hands.   They want us to be easier to manipulate.
 
Thankfully, so far at least, we are having none of it.
 
Caveat Emptor when you place your vote...
 
Dino Manalis Added Dec 22, 2017 - 8:44am
Individuals and businesses always need pro-growth policies to encourage them to spend and invest, while our foreign policy has to strive for peace; stability; and prosperity worldwide and fighting terrorism is much more about defense than offense.
Todd Flora Added Dec 22, 2017 - 12:26pm
The income tax was passed by constitutional amendment, and therefore USED THE CONSTITUTION AS IT WAS INTENDED. So it wasn't illegal. It was gotten through state-by-state campaigning. What gets forgotten is the reason why we have an income tax. It's because of the prohibitionists, who, as they outlawed alcohol, took away about 90-95% of the tax revenue the government lived off of until that time. They needed something to replace it, and -- wa-la -- the income tax was born of a Constitutional Amendment. Now these same social conservatives do nothing but complain about the income taxes they invented.
wsucram15 Added Dec 22, 2017 - 12:51pm
Katharine;
Great article, in 2008 oddly enough I was only vaguely aware of our recession which caused a slight downturn in 2009 in my company's profits overall and while we still made a profit ( we made 50% of the corporations revenue) the rest of the company's 9 locations lost money.  It wasn't bad but that year our rather large bonus' didn't appear as usual.  We were the only company to have the lavish crab feast and Christmas parties which made the rest of the corporation angry..but you see, it didn't affect us like that.
 
Until we sold the company in 2011...and the new owners moved it in 2013.  Thats when the recession reared its ugly head my way.
I knew it was coming and thought I prepared but naaahhh.
 
So I realized that it was bad and answered this question CNN asked online about unemployment (what its like) with a letter. It really changed ( and woke me up) how I now look at things. I got a great education very quickly on how ineffective the government really is.  I was contacted by NELP because of the letter and along with other very educated people began speaking to different members of  Congress.
 
We spoke about losing homes, one man had a PhD (he was from far away) and he did a deed in lieu of foreclosure.  One young woman with a masters in engineering had to move back in her parents home. One young couple in laurel, MD lost their home, and another woman from PA who also had a masters degree and they cut her back. They used their savings to keep their home, but its all they had.   Me on the other hand, still had my house but was in litigation, and I was in school.  However I had to situate people at my job under the WARN act with reeducation. Also watch my boss be tortured and die in front of my face..because he was too nice.
But I digress, he lost everything...he was highly educated and in a year lost everything and died due to both his and his wifes stress and medical expenses.
 More or less how the "great recession" had impacted us and people we knew.
So I talked about these things to the Senate and House Committees. First on the Capital Steps because the Republicans and Democrats fought like children in front of us and the Republicans threw us (the people) out.  Yeah...out of a building we pay for...which I spoke up about but actually had a Pelosi staff member put their hand over my mouth.  Apparently, even though we were constituents and both sides were aware of the meeting, a paper was not filled out..so the Dems had to leave.  Now we could stay and have half the people hear the things we had to say or go outside with all of them.  Im not kidding.
 
On another day, we had a small committee, the Congressional members listened and Senator Sanders was involved in the aftermath of this in his work for the unemployed.   There was a buffet, it was so nice, they asked the right questions, but no one listened.  All programs implemented at that time to help people were put in place by the White House.  Congress was stalled and did nothing for years  and as far as I am concerned were negligent in their duties to the point of criminality.  Thats just based on what I saw.  Not stories, what I saw and photographed.   The Baltimore Sun even wrote an article on the stuff I had done that year.
 
Do you know what happened after a year of speaking with Federal and State officials..nothing.  Sanders was the ONLY person that sincerely tried to get something done.  I even spoke to white house officials who contacted me on the matter.  In my opinion, in working with them, the only people that TRIED to do something were the staff at the WH and Sanders. 
 
Now I have been protesting the government since I was 16- maybe 17.   I got involved with Iraq and Women's rights during Bush 44's term.  But I have still not been involved in anything like the past few years with the recession which I still dont think (in spite of what everyone reads) we are fully recovered from.
Housing prices are higher than before the bubble burst, the stock market is the highest in history,  jobs arent paying any increases for savings, people that did have savings had to spend it to live, also people arent being offered the types of jobs they previously were, consumers are spending on credit more- they have more debt(must be a thing). The reason Im told, is corporations are making money hand over fist GLOBALLY.  So everything seems stable.
But the trade deficit with China is up and I still see sludge.   But thats just me.  Lets see how 2018 looks. I never believe what Im told.
Robin the red breasted songster Added Dec 22, 2017 - 1:49pm
For those of us actually involved in making things... we are now in a global competition both with other workers and with automation.
 
Many parts of Africa and Asia have low skilled people earning as little as a $1 an hour or even a day...   Some robots get paid even less.   For workers in the US and Europe it is difficult or impossible to compete with this.  We are not able to survive on such wages.
 
Gradually the wage arbitrage in skilled jobs is equalising... skilled Asian software engineers, for example, realise that they can get paid several times their current salary and therefore will vote with their feet if their wages are not increased.   But not everyone has the education or the nerve to try moving to another country.   Those with poor education are stuck.
 
Most corporations now operate in a legal state which might as well be in outer space... hovering above the world.   They make their profits ... in outer space where the tax rate is zero...   And they hoover up human effort and resources from wherever they are cheapest.   A click of the mouse and manufacturing is switched from one country to another.
 
The profits made by shareholders hardly ever touch down in the real world either.  Essentially profits and capital is sucked off of the planet's surface to become little more than numbers that give a sense of achievement to a small number of people who already have far more money than they could ever spend in a dozen lifetimes...  Unlike the tycoons of old, they are so far removed from the people whose lives they effectively control that they feel little responsibility for their welfare.   They are simply lines on a profit and loss sheet.
 
Individual Governments, even if inclined to do so, can do little about it.  The corporations that they try to control would simply switch out of their jurisdiction...
 
It is the greatest challenge ever to our liberal democracy
John Minehan Added Dec 22, 2017 - 6:49pm
Part of the problem was that sub-primes failed at lower rates than did ordinary loans, which made a lot of the derivative instruments not valueless but undefined in value (and, therefore, much harder to account for)..
 
Part of this is traceable to the fact that NINJA Loans were useful to people like foreign investors or people in the underground economy who did not want to provide personal financial information. 
 
As a real estate lawyer told me during the boom, "Tony Soprano no longer has to pretend to be a waste management consultant for this purpose."  
George N Romey Added Dec 22, 2017 - 9:08pm
Corporations have lost the desire to pay well and allow their employees a decent living. It’s simply a race to the bottom until the crash of most developed economies.
Katharine Otto Added Dec 23, 2017 - 10:23am
Robin,
You make many good points.  Caveat emptor is a nice notion, but it doesn't help when the seller changes the rules after the sale, as government, banks, and insurance companies--for starters--typically do.  
 
As far as living wages go, the amount of money paid doesn't matter as much as the buying power.  If you don't make enough to acquire food, or if the food isn't available, the amount of money becomes less relevant.  
 
I don't know enough about British history to challenge anything you say about the post WWII  circumstances.  I can say the US doesn't treat its vets right, either, and we are still creating maimed and mutilated who are homeless and destitute.   The difference in the US is the war has not within recent memory been on our own turf, whereas the UK directly experienced the bombing.  In this regard, Americans are spoiled and only know indirectly the horrors of war.
 
Don't get me started on the corporations, who have no loyalty to any nation, or even their own employees, and pray merely to the bottom line.  Do-nothing shareholders reap the dividends while products and services suffer.
 
Foreign investment may be the most debilitating condition (except for debt, which is related) for any nation's economy imaginable.  Once again, the foreign investors have no loyalty or no sense of obligation to maintain water quality or environment for local inhabitants.  Also huge infrastructure, like dams, displace people and serve corporations way more than they do local populations.
 
 
Katharine Otto Added Dec 23, 2017 - 10:26am
Neelon,
Not my point.  I only reported the word on the street at the time.  I also had a general sense of the state of the economy through reading newspapers and periodicals.  My sense at the time was all the creative "financial instruments" that were being invented to play the shell game of pretense that became ever more apparent during the meltdown.
Katharine Otto Added Dec 23, 2017 - 10:30am
Eileen,
Thanks for the support.  I would be swallowed up in Congress, because my goal would be to curb all spending--something neither Democrats or Republicans want to do. 
 
How can we expect the American people to show any fiscal responsibility when our so-called "leaders" are so out of control?  I think individual and national debt creates the greatest drag on "the economy," and jobs would pick up naturally if employers didn't have so much debt and other overhead to contend with.
Katharine Otto Added Dec 23, 2017 - 10:34am
Mark,
I think some people have learned that being in debt is dangerous.  Also, they have learned there are no truly safe havens for money.  If investments don't get zapped by the stock market, or the bottom dropping out of housing values, inflation eats away at savings, or prices go up.  Best to focus on cash flow than hoarded wealth, but therein lies the creative challenge.
Katharine Otto Added Dec 23, 2017 - 10:37am
George,
The Fed is more like Santa Claus than the rich parent, because it creates money out of thin air.  No one wants to know what a scam this is, yet the Fed is revered somewhere over God as supreme entity over the "economy."
Katharine Otto Added Dec 23, 2017 - 10:39am
Dino,
Pro-growth like a cancer?  I believe "pro-growth" is a misnomer when it depends on debt.  The idea that "you have to spend money to make money" becomes suspect when you're spending money you don't have and may never get if income never catches up with expenses.
Katharine Otto Added Dec 23, 2017 - 10:44am
Todd,
My understanding was the constitutional amendment creating the income tax was never ratified by the necessary number of states.  Also, the Federal Reserve Act, which delegated monetary responsibility to the private bankers, was in direct defiance of the Constitution and was not supported by a constitutional amendment.
 
You're correct about the loss of revenue from the tax on liquor, but when Prohibition was repealed by FDR, the feds got the liquor tax back but neglected to eliminate the income tax.  
George N Romey Added Dec 23, 2017 - 10:50am
Katharine over time the Fed and their big banker friends have turned us into a debt based and fueled economy.  Eventually debt no longer provides the return that it once did.  In the 1980s when consumers began to load up on credit cards, second mortgages and extended car loans it had a significant impact on economic activity.  Now its actually costing the overall economy and creates bubbles like subprime mortgage and auto loans and student loan debt.
Katharine Otto Added Dec 23, 2017 - 10:52am
Jeanne,
Thank you for the personal examples.  You stated my case better than I did, and you did more to protest the injustice.  I'm not sure the government, which largely created the problem, with its kow-towing to the Fed and Wall Street, could do much to correct it.  And though Senator Sanders may have cared, I've never believed he has any enlightened perspective on the root of the problem.  Maybe no one does.
 
I agree we are far from "recovered."  I believe stocks are falsely inflated and "the economy" is running on inertia.  That Americans don't trust or like each other, government, or the future tells me we are desperately seeking relevance in a world where we are looking more and more like spoiled brats who don't know how good we have it.
Katharine Otto Added Dec 23, 2017 - 10:56am
John,
Probably no single factor was responsible for the fall-out of 2008.  It took a combination of factors, but the sub-prime mortgages were the most vulnerable.  It showed me the entire economy is ultimately based on real-estate, and individual homes are crucial to keeping everything else propped up.  I think of the farm foreclosures in the Great Depression, with debt once again making the difference between those who made it and those who didn't.
Katharine Otto Added Dec 23, 2017 - 11:02am
I do believe the nature of work is changing.  The advent of the Industrial Revolution moved people from rural, agricultural jobs to the cities and factories, and made many skills, like weaving or carding wool, obsolete.  Artificial intelligence is now making many other jobs obsolete. 
 
There is a glut of demand and growing supply for tech and computer workers, but I wonder how long this will last.  When I speculate on jobs of the future, I think of the fields of alternative energy and waste management, among others.  Multi-lingualism.  Unimaginable fields, just as the computer revolution was unimaginable in my childhood.  What other areas might be open to future aspirants?
George N Romey Added Dec 23, 2017 - 11:08am
Katharine the little dirty secret is that the Fed has a massive trading desk helping to support the stock market.  I've listened to respected people that have been in the business for over 40 years and they see it as nothing more than a ginned up market.  There is no true price discovery or share price to earnings correlation.  For example a company like Netflix is barely profitable, often losing money is now priced at nearly $190 a share.  For example for the first nine months of 2017 the company had $3 billion in revenues but less than $130 million in profits, or a pathetic return of less than .05%.  Does that sound like a $190 stock to you? 
 
The subprime mortgages weren't really the problem.  The problem was the myriad of derivatives underwritten on the underlying crap.  When the crap went made the caca really hit the fan.
John Minehan Added Dec 23, 2017 - 1:10pm
"The subprime mortgages weren't really the problem.  The problem was the myriad of derivatives underwritten on the underlying crap.  When the crap went made the caca really hit the fan."
 
Instruments that neither those selling them nor those buying them (in each case, at financial institutions) understood.
 
Further, many of the Quants who designed them deeply understood the complex math that subtended them . . . but not really the underlying transactions the instrument was supposed to represent.  
wsucram15 Added Dec 23, 2017 - 11:57pm
Merry Christmas Katharine
Eileen de Bruin Added Dec 24, 2017 - 8:52am
Well, Robin’s points about the genie out of,the bottle and universal health care and co?  If only it were all still true.
 
Nah. Since the Thatcher regime, the UK model has been being reshaped. This has cumulated into the UK now formed into exactly the US model. Private healthcare is needed and state education is poor and weak. Universities charge increasing fees and only those with means can go. Many people are desperately poor and homeless; hardened government policy has doubled the rates thereof in just the last five years.
 
The huge gap (and this isn't just about income but about housing, education, neighbourhoods - the deprivation of massive areas of the UK ) between the Rich and Poor in the UK - shows us that Victorian era diseases of the poor, including rickets, are back. And this didn't happen overnight!
 
After a brief but significant change of hearts and mindset after the WWII, where universal, healthcare and education and housing were at the forefront ( after the memories of WWI and its soldiers coming back only to poverty and no health care at all, to be thrown back into WWII within a generation) say thirty years of well meaning government ...and a people who demanded such, it is now well and truly over.
 
The UK is the US in all but size.  A little satellite to its Uncle Sam. 
 
 
Katharine Otto Added Dec 24, 2017 - 6:10pm
George,
It was my impression, too, that the sub-prime mortgages were only the most visible part of the problem.  I'm an amateur Wall Street watcher but noticed the derivatives and other instruments like real-estate investment trusts were other shells for hiding nonexistent money.  
 
I didn't know about the Fed's trading desk.  Now that Ron Paul has left Congress, we may never get to see how that operation really works.  I would like to think Rand Paul will carry the banner forward.  
Katharine Otto Added Dec 24, 2017 - 6:12pm
John,
I think there was intention to deceive, to make the process so complicated that no one would know the instruments were backed by nothing except false promises.  Nothing has changed since then.
Katharine Otto Added Dec 24, 2017 - 6:12pm
Jeanne,
Merry Christmas to you, too.
Katharine Otto Added Dec 24, 2017 - 6:15pm
Eileen,
It's all so complicated.  Fact is, we are all conditioned to be weak and sickly, with no incentive to maintain good health and vitality.  I'm one of the few people who believes the constant wars and other conflicts are sapping vitality on spiritual, mental, and emotional levels.  We need to re-set our ideas about what it means to be healthy, and I still believe it won't come from the government or industry.
Eileen de Bruin Added Dec 25, 2017 - 4:26am
Katharine,
yes, well said. A move of our focus away from mainstream news and other media towards what really matters, which is finding out for ourselves, would help to build up good energy.
 
In this Season of Goodwill we remember that a child was born in Bethlehem. His parents had gone to Jerusalem to register on the Roman census. The Jewish royal household was disturbed to learn about a high born child coming into,the world, from Kings in neighbouring countries. So they sent soldiers into Bethlehem to kill all male children under the age of three.  The family of Joseph, Mary and Jesus fled, as asylum seekers into Egypt where it is likely that Joseph found work as an immigrant. They would have used the gifts from the three Kings to supplement their living.  Years later, they were able to return to Nazareth.
 
Not much changes eh?
George N Romey Added Dec 25, 2017 - 8:39am
Katharine Merry Christmas. Sadly Rand Paul or anyone else is going to take on the Fed.
Katharine Otto Added Dec 25, 2017 - 8:20pm
Eileen,
Well, Herod didn't get him, so all the king's power was for naught.  We can only hope that kingly power doesn't destroy what is truly important.
Katharine Otto Added Dec 25, 2017 - 8:27pm
Now George,
Maybe Rand Paul won't do it, but the veil is wearing thin.  I'm reading Woodrow Wilson's biography now, by August Heckscher.  While Heckscher devotes a couple of pages to the Federal Reserve Act (in this 675-page book) there's nary a mention of the income tax.  I think this is incredibly strange, as though the income tax, so important in our lives today, was an afterthought, barely worth mentioning. Yet this, the Federal Reserve Act, and WWI were to me the most significant acts of his tenure as president. 
 
No one but me sees the connection between the income tax and the Federal Reserve Act, but the fact is that it was passed first, in order to insure perpetual interest payments to the Fed on federal debt.  Alexander Hamilton used the same ploy with the whiskey tax and the first central bank in 1790.
Maureen Foster Added Dec 26, 2017 - 1:40pm
Taxpayers would be shareholders, each with a binding vote on the government budget, and they would only pay taxes on services they wanted.
 
In theory that may sound plausible, but in reality it’s impossible.  Suppose you’re retired, elderly and dependent on the state for your livelihood, how will you pay taxes on your services?  Assuming I’m not all those things, are you saying I don’t have to pay?  In other words, how do those services get paid for?
 
The military provides us all the same level of service, so I suppose that’s an easy, we all pay the same amount.
Katharine Otto Added Dec 26, 2017 - 5:26pm
Maureen,
Everyone pays taxes.  Most people think only in terms of income taxes, but you pay excise taxes on utility bills, phone bills, liquor, cigarettes, and many items like peanut butter and other items that have protective tariffs.  You also pay sales taxes, and one way or another pay property taxes.  Then you pay licenses and fees, which are also taxes.  If you drive a car, you pay for tags and license, as well as liability insurance, which is also a tax.  People are sadly uninformed about how much they pay in taxes, because most are indirect, as specified by the Constitution.
 
I think it would be difficult to estimate how much each person pays in taxes, but theoretically, it would be a way to estimate how each person views the relative value of government spending.
Maureen Foster Added Dec 27, 2017 - 4:22am
I’m fully aware of the fact the government has many taxes.  However, the fact the government has many taxes has nothing to do with your suggestion that we only pay for the services we demand.  Suppose I walk into a convenience store to buy a stick of gum and the clerk charges me a sales tax.  Are you suggesting I should have the right to refuse to pay it on account I don’t believe I derive a government benefit/service from the tax?  I send my kids to private school, can I refuse to pay property taxes in light of the fact they mostly go towards public education?
Eileen de Bruin Added Dec 28, 2017 - 4:01am
Katharine,
no, Herod didn’t get him. In the end it was his own folk and the political system that contrived against him. He was too much of a threat!
 
Greetings and goodwill to all men and women.
Robin the red breasted songster Added Dec 28, 2017 - 4:49am
Maureen:  I think that the argument for taxes paying education, even if you personally send your kids to private school, goes as follows.
 
Education leads to a more employable and generally better off population.   This provides both a potential workforce and market to allow businesses to become established and grow.    Of course this increases the wealth of the businessman.  It also leads to a more contented population which is less inclined to crime or, perhaps, revolution.   The rich really don't want to ultimately face a "pitchfork" revolution....
 
So helping to pay to educate others does, in fact, have a benefit for the wealthy.    Similar arguments might be applied to healthcare and even welfare payments.
 
It a kind of "trickle up" argument.   By improving the lot of those at the bottom of the heap, you improve the general well being of everyone.   Of course you have to realise that $5 means a lot more to a poor man than it does to a wealthy one... and makes much more difference to his life.
 
Americans will struggle with this sort of argument because of their individualistic attitude.   Any argument based on the "common's dilemma" causes a problem for them.   It is the same with gun regulation.    If no-one had a gun, there would be no need for anyone to have a gun.   But the individual American says "I am not giving up my gun"...
George N Romey Added Dec 28, 2017 - 8:17am
Education benefits a society. Educated people in America have been behind the technology and productivity revolution that has provided cheaper costs and higher profits to business.
 
Unfortunately our education system in many districts has become sub par and throwing money at it isn’t the solution. Part of the problem is that parents are using schools as day care,
Neil Lock Added Dec 28, 2017 - 12:15pm
Katharine: I do apologize for not joining this discussion earlier. I thought this was just a re-appearance of an earlier article. My bad.
 
I could hardly agree more with what you write here. And the comment thread has been amazing! Interestingly, the otherwise ubiquitous Opher has been conspicuous by his absence on this thread.
 
I’d like to add my own view on taxes. For me, each individual should pay for government in proportion to the benefits he or she gets from it. It’s like home contents insurance; what you pay is in proportion to how much you choose to insure. The only just payment for government is in proportion to wealth. So, I regard all taxation on incomes or transactions as socially conservative. It benefits the already rich, at the expense of those who are (or should be) upwardly mobile.
Katharine Otto Added Dec 28, 2017 - 7:09pm
Maureen,
I'm not suggesting you refuse to pay for the gum, but I wonder about sales taxes.  Since sales taxes mainly go to state governments, perhaps refusing to pay them would curb state government spending.
 
People are far too accepting of taxes, as if the government has a right to them.  Maybe this idea needs to be re-thought.
Katharine Otto Added Dec 28, 2017 - 7:10pm
Eileen,
It seems most leaders are brought down by those in the  best position to benefit by them.
Katharine Otto Added Dec 28, 2017 - 7:13pm
Robin,
I'm fine with public education, but how much for fundamental skills--like reading, writing, and areithmetic--and how much forpropaganda?  Whose version of history?  Whose version of politics and current events?  
Katharine Otto Added Dec 28, 2017 - 7:14pm
George,
That's why education should concentrate on the fundamentals.  If someone can read and write, she can learn anything else she wants.
Katharine Otto Added Dec 28, 2017 - 7:18pm
Neil,
Taxes on income give the government the authority--but not the right--to pry into every individual's personal assets, and to confiscate it if the government deems it suspiciously obtained.  The whiskey tax did the same thing, and both were enacted to provide perpetual interest on national debt to a central bank.
 
The Federal Reserve Act put the US Congress in the debt creation business, and our "economy" has run on that model ever since.  No wonder we are drowning in debt.  
 
How much does government spending benefit you?
Neil Lock Added Dec 29, 2017 - 6:46am
Katharine: Over my life so far, benefits to me minus costs to me from government activities have been a large negative. Even the one major benefit I did get (a top education) had its own, undesirable side-effects.
 
I wonder how many others here would agree?
Robin the red breasted songster Added Dec 29, 2017 - 7:09am
Here is my, "top of mind", plus and negative view of Gov.  Personal view only
 
On the plus side of what Gov has done:
 
Top education:  enabled me to move from my working class beginnings to be a telecom entrepreneur.  Also provided a pool of talent that I could draw on in various businesses
 
Health service:  meant that I never had to worry about how to provide for health care needs of my own or my family.  It also means that I will probably live longer than was possible before
 
Animal passports etc:  The response to the mad cow issue has meant that we now have much more traceable food.  This means greater food safety
 
Export support:  Helped me to get a couple of businesses off the starting block
 
Negative Side:
Paying for it all.  Has to be paid for through taxes eventually.  Of course, the more successful you are, the more you pay.  I appreciate that the more successful you are, probably the more benefit you have probably actually derived from Government programmes also
 
Regulations that as a small businessman are a pain in the ass to administer
 
Lack of support for intangible heritage of these islands e.g. traditional song, dance etc
 
Got us into a couple of questionable wars... most notably the invasion of Iraq.
 
Treating primary and secondary education as a political football... with sudden changes of direction every couple of years
 
Robin the red breasted songster Added Dec 29, 2017 - 7:15am
Katherine:
 
On history:  Yes, indeed.  Whose version do you believe.
 
For many years, when I was young, we were fed the McCaulay version of history... the version the establishment would like us to believe... filled with Imperial heroes bringing benefits to a grateful Empire etc etc.
 
Today I find this version hard to stomach, although hidden within the blatant propaganda probably lurks some elements of truth
 
Now I tend to look more at the history of people power in our country.  The popular movements which gave us the abolition of the slave trade, universal suffrage, the right to roam and universal health care etc etc.   Personally I find more cause for pride in this version of events than the McCaulay version
 
Eileen de Bruin Added Dec 29, 2017 - 7:24am
Katharine and Robin and Wsu and Neil, George and Maureen and everyone on here...
 
top down, bottom up models, yes look at both ends and they will meet in the middle.  That is balance.  Deming is your man and he was American!  He was farmed out to Japan and look what happened there.  Do, take heed.
 
As above, so below - let us all try to meet our own expectations of thinking before judging; pondering before thinking; and opening our hearts into pondering.
 
Wishing you all a happy and ponderful and beautiful Old Year's Evening and New Year's Evening, it all depends how you look at it right?
 
 
Katharine Otto Added Dec 29, 2017 - 11:29am
Robin,
The more I know where food comes from, the more nervous I get, and the more determined to grow my own.  But you know what?  It's hard to get seeds that haven't been contaminated by other peoples' versions of "progress."  At least the UK was a little slower to admit GM food, a sign of greater civilization. 
 
Now we have those major mergers of chemical/seed/pesticide/herbicide/pharmaceutical industries in front of us.  Bayer/Monsanto, Dow/Dupont and Syngenta/ChemChina are to be watched, as the international oligarchy trying to corner and control the food and poisonous chemicals supply.  Archer Daniels Midland and the ethanol mandate are complicit.
 
Are you familiar with the ecologist (not the economist)?  It's a UK based periodical that does great investigative journalism regarding the corporate bootprint around the world.  Best in-depth reporting on environmental issues I've found.
Katharine Otto Added Dec 29, 2017 - 11:30am
Robin,
Also speculating about appropriate and useful school subjects.  I could make a bid for geography, in this global world.  So often when I read news I wish for maps of the areas covered, and something about their people and history.
Katharine Otto Added Dec 29, 2017 - 11:37am
Neil,
Government in my face has been the story of my life.  The more "useful" you are deemed to society, and the greater your earning potential (like being a doctor), the more government is in your face.  I retired largely to drastically reduce my income and fly under the radar.  When income goes up, so does overhead, sometimes faster than income, and you find yourself like a hamster on a wheel, running faster and faster and going nowhere except to a heart attack.
 
Who needs it?  I am not a martyr and think high income is vastly over-rated and only buys trouble.  Better to make a reasonable income--enough to cover expenses and not allow you to buy stupid things impulsively.  High numbers meaning investments in something like Treasuries or the stock market, both of which I disapprove of.  Banks, too, and you can't count on the cash.  Coins, maybe.  I save my change.
 
 
Katharine Otto Added Dec 29, 2017 - 11:42am
Eileen,
I don't understand your reference to Deming, even though I looked him up on Wiki.  I'm not fond of census takers, myself.  Why does government need to know how many taxpayers live within its borders?  The census was the second priority of the US Constitution, after establishing a legislature to make laws.  Of course, women were never acknowledged, although people made a big deal out of Native Americans and slaves.  Women the invisible people, probably freer for having been unacknowledged
Robin the red breasted songster Added Dec 29, 2017 - 11:50am
Katharine:  One school subject I recommend to be obligatory is religious education... but done as it is done in the UK.
 
All kids should be taught about all major world religions in an objective way.   It has never been more important to teach tolerance and understanding than it is today.
 
Faith based education can be allowed, but only in addition to such broad based teaching of religion.
Katharine Otto Added Dec 31, 2017 - 12:16pm
Robin,
I'm all for religious education, as long as all the world's religions are considered, such as Hinduism, Buddhism, Taoism, as well as mythology, and maybe even Native American naturalism.  I think we can attribute many of our social ills to paternalistic monotheism and war.
 
Westerners are far too presumptuous thinking they have a monopoly on religion.  

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