Wednesday, February 17, 2010

Pat Chaote in 'Saving Capitalism'

Pat Chaote has published a book titled ‘Saving Capitalism’.  I heartily recommend it as mandatory reading for all Americans.

This is a short history of what has gone wrong over the past decade and also why.  I have already posted that the cause of the financial disaster was outright treason.  This is the first economist to come out and spell out the details.  He adds to my own observations and for exactly the same reasons. 

He also rings the bell on the advent of state sponsored capitalism.  This is not going to go away and must be vigorously regulated.  This is an area that I admit I was aware of but had been happy to largely ignore.  That is not a good idea.  We do not have to wait here for human stupidity to arise before we act.

He outlines several excellent recommendations to remedy the situation that need to be implemented.  It is likely that this will not happen during Obama’s tenure.

He rightly describes the present situation as a depression with a small capital. 

If you want to understand what is presently taking place in the USA, then get this book.

As he clearly points out, the collapse has mirrored the collapse of the Great Depression.  We are now entering the second phase of the collapse cycle, were good business is strangled for cash and a second wave of massive layoffs is in store.  People with good jobs and partially paid for homes will suddenly find themselves forced into liquidation.

That is the present risk that must be averted.  It is now that you want to be scared.  Saving Wall Street cannot save Main Street if the banking industry is unable to lend.

California is on the verge of collapse and must internalize its banking arrangements as soon as possible in the same way as was done by Montana and Alberta during the Depression.  It is the only way in which the political forces in the state can be brought to heel.

Europe is struggling to contain Greece and may not succeed.  In that case, expect the currency arrangements to become at least partially unstuck until it gets sorted out.

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