Republican Path to Victory in 2012: Take Down the Economy

Boehner-ObamaWe get that Republicans don’t care about folks like us. We know they are willing to stop Social Security payments, and payroll for the members of America’s armed services rather than raise the debt ceiling. We get it, we really do.

But to tank the American, and likely the global, economy just to give their lame candidate (whoever it might be) a chance at taking down Obama in 2012? Exactly that is starting to look to like their best strategy.

The Economist: ‘America is undermining its economy for no good reason’

It’s not just Americans drawing a line between a House vote not to extend the debt ceiling and economic setbacks. Our friends across the pond are making the same observation.

Blogger “R.A.” at Britain’s The Economist predicted with exact accuracy on June 1 that such moves would mire economic growth, and decried these self-inflicted wounds. Our stock markets dropped that same day.

R.A. begins with the big picture, the one tea partiers and FOX News miss.

There are one-off factors contributing to the slowdown, the Japanese earthquake and subsequent economic slowdown chief among them, but it’s hard to avoid the conclusion that America is joining in the broad global economic deceleration which appears to be underway…Chinese industrial figures are showing an easing in activity, and India’s economic growth slowed sharply in the first quarter. All signs in Europe point to deceleration, threatening to exacerbate the euro zone’s crisis. Things should—should—turnaround as the year progresses…But fiscal and monetary tightening, or new shocks, could prevent this.

Did you catch that? Fiscal and monetary tightening are exactly the wrong way to go.

America’s government is making its economic road harder than it needs to be. Debt problems loom, but there is no immediate fiscal crisis and no need for drastic short-term cuts…China is a patient investor. It wants America to take steps toward fiscal sustainability, but it’s happy to have this happen over a 5- to 10-year period. By cutting drastically now, America is undermining its economy for no good reason.

Republicans don’t want the economy to recover. After all, what else have they got?

Actually there’s a very good reason — if you’re Republican. Tanking the economy is the single best way to hurt the man who got Bin Laden, who will have brought most of the troops home from Iraq and Afghanistan by Election Day 2012, who passed health care reform, and who has, so far, not a single scandal as president.*

An effective way to bring down the American economy is to make our debt radioactive. And that’s easy enough. Just start missing payments.

Trouble in Europe and a slowdown in Asia have made the safe haven of American government debt more attractive. Which makes the tussle over America’s debt ceiling look even more unnecessarily dangerous. The other consistent message from Chinese officials on debt matters was that any failure to make good on American obligations would be catastrophic. Even a very short disruption in payments, of a week or two, would be totally unacceptable.

…the decline in Treasury yields indicates the nature of the fire with which legislators are playing. If Congress called into question the safety of the one safe asset for which markets have an almost unlimited appetite, all hell would break loose.

Republican translation: We win!

Jon already noted that few are blaming the falling stock market on that House vote. Fewer still are saying what I am: that Republicans don’t want the economy to recover. After all, what else have they got?

* Unless you consider a clumsy toast to the queen a scandal. Still, it hardly compares with throwing up on the Japanese prime minister.


  • June 4, 2011 - 7:31 am | Permalink

    Look at the situation from the point of view of our Republican friends:
    Capitalism is a system of creative destruction. If default leads to a new state system without Social Security, where the role of government is limited to police and the military, so much the better.
    In a conversation with the late Nestor Kirschner of Argentina, the US President Bush noted that the last great depression was liquidated by the economy of war spending, in World War II.
    This is an attitude now widespread in the establishment, and there labels like Republican and Democrat are irrelevant: Except when talking to the suckers; whoops I mean voters.

  • lorenzolarue
    June 4, 2011 - 9:05 am | Permalink

    We should call the Rethuglican congress including the Senate, Economic Terrorists, because that’s what they are!

  • June 4, 2011 - 9:09 am | Permalink

    Sounds like “Domestic Terrorism” and treason to me. If true, the Republicans and DINOs in office in D.C. need to be rounded up and sent to Gitmo, but only until their fair trials, of course, many years from now.

  • F Buckley Lofton
    June 4, 2011 - 12:46 pm | Permalink

    The fix is IN. Put another way, Hyman Minsky’s Financial Instability Hypothesis – as Commodities go up (they doubled 2002-2006) the World gets poorer. His analogy stretched back to the 1970-1974 Commodity rise with consequent results. Now, the Goldman Sachs’ and Morgan Stanley’s are raping us again (they have control of the Messaging – and every effing Representative of our Gov’t). Predominantly, an SEC Rule change in June 2004, screwed the Economy and the United States blind. This was regarding Net Capital Rules (of Wholesale Banks…aka Banksters) that allowed Securities on the Balance Sheet to be leveraged at an Amount of 40:1 versus Traditional Banks by Statute are held to 10:1. Then, in 2007, another SEC Decision was to eliminate the “uptick rule.” This required every Short Sale to be transacted to a Price higher than the Price of the previous trade.
    The Net Effect is a repeat of these conditions presently. A refusal to investigate by Regulatory Bodies, you know that “look forward and not back agenda” by Obama, has left the country vulnerable. This is actually a National Security Issue. The Economy is once again on the ropes…due to the Commodities Exchanges and Oil being juggled into the stratosphere. The fictitious Leverage Ratio is largely unenforceable due to the speed at which holdings are changing. Margin Calls are fundamentally crushing when leveraged at anything over 20:1, let alone the Bear Stearns and Lehman Bro’s at 50:1 or 45:1. Minsky’s Hypothesis is actually a restatement of the Heisenberg Uncertainty Principle. You can determine your Position (in the Market) but you can’t state your Velocity (of Trades) with precision or certainty. OR: You can state the Velocity of your Trades, but you are damned if you can show what your position (credit or liquidity) is in the Market. The only way a Quantum State in an Economically feasibile paradigm is a “snapshot moment” that is a controlled hiatus or period of assessment throughout the Trading Day. Computers run by Regulators are the only bastion to the Barbarians at the Gates.
    Sooo – there are two distinct types of traders. The industrial or commercial sector and the speculative or gambling sector. Goldman Sachs grossly underestimates the fees and profit taking by speculators. They currently control the Media Message and have more money than god to do whatever they damn well please. They have every reason to underestimate because they are largely guilty of market manipulation – a crime. Most Americans (how about 95%) have no idea that this arena is the cause of the 2007-2008 Collapse (Depression) that was understood clearly by Paulson when he said there was to be NO INVESTIGATIONS for the TARP bailouts. Funny how that is. The number of Congressman (Senate Millionaires/ Billionaires Club and the pipsqueak Representative Millionaire Shills) that have Accounts with Goldman Sachs or Morgan Stanley or… fairly complete and ruinously duplicit to our Economy. No wonder its 17 Senators [One Repub, No Representatives…] that are taking issue with this. And the Public is largely duped by information and misdirection by the Oil Industry and paid message byte stooges that largely lie about “the Chinese and Indians driving up the Prices.” It is Speculators. (Remember: January 2008, Oil at $150/Bbl. and by May 2008, it’s at $30/Bbl.. Nice.] Period. Computer buys and trades are phenomenally fast and cannot be stopped with the current level of inadequate controls. The leveraged positions of these Banksters is WAY over 45:1, still. The suggested controls now present? Not likely to help. Removal of the Oil Contracts from speculation is IN THE INTEREST OF NATIONAL SECURITY. And placing National Security in the hands or decisions of Foreign Nationals or the Good Corporate Citizen is like giving your daughters to rapists and expecting everything to be okay. Not likely. Or giving this market over to Corporatist Multi-Nationals is trusting their amoral behaviors will be good for the “free market,” which Bernanke has made very clear, doesn’t exist without the Fed’s “help.” (Hence the attack on Grayson by the Billionaires Club.) Nationalize the American Oil Industry to get a track on Renewable Energy (because if you take a Survey as to whether the American People believe these Fossil Fuel Schmoos will EVER develop or allow development of RE solutions???? Not likely). Shake the Cookie Jar Loose. All those Patents that have been seized under National Security over the last sixty years that pertain to Energy….(under the Invention Security Act of 1951…No One Know about that? One of the greatest scams perpetrated against the American People by dozens of government agencies and services……hugely fraudulent.) But then, who cares? Certainly not the Republican puppets of these more-money-than-God imbeciles that have de-railed virtually every good thing in this country for their gain. And sent tens of millions of Jobs overseas…and created NAFTA…..and changed banks into swindling operations where it is your problem (identity theft, huge maximized overdraft fees, PayDay Loans, hacked computer systems, MERS mortgages, etc.) and no one else is experiencing that problem? So, in that vein, if you get the Plague, get your own cure. My hope is that the Republicans get a Plague of Party defectors, realizing that these are the same idiots that refuse to correct the Economy or investigate the corruption…because they are the corruption.
    So, let’s consider a Reform Measure to get things straight – for once. As alluded above, every Quarter Trading Session (1 hour: 45 minutes, or so), every firm that trades on the Commodities Exchanges would be displayed showing their Hedge Ratio (IN BIG RED NUMBERS) and their current Contract/Trade Numbers. Of course other pertinent Computer figures that our OH SO diligent Regulators are feign to undertake, would be PROMINENTLY DISPLAYED EVERY TWO HOURS. After all, IT IS ABOUT TRANSPARENCY, RIGHT BERNANKE/GEITHNER, ET.AL.??????? And then, the SEC, CFTC or Others can actually step in and halt over leveraged trading. Otherwise, kiss your collective asses goodbye to the Banksters.

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