Archive for October, 2008

Eight days to go

Monday, October 27th, 2008

Tomorrow, which is almost here in UK, there will be eight days to go before the US election. The latest polls suggest that Obama will win comfortably. And John McCain’s camp are already starting to blame each other. They are thinking in terms of how to preserve their own careers by blaming the impending defeat on someone else.

The Murdoch press is not shouting for McCain, but they are running stories about the danger of a world we have not seen since 1932, when a Democratic President may come to power, with a majority in both houses of Congress, making it far easier for him to get his proprosals into law.

So the Murdoch press is not saying Obama is bad news. But they are warning their readers that, come November 4, the Democrats are likely, not only to have the White House, but they will also have comfortable majorities in the House of Representatives and the Senate. So they are telling their readers not to give him, and the Democrats, too big a majority.

Depending on which Murdoch paper you read, this is a threat of America being taken over by a lefty lot or by a liberal lot.

Despite his conversion to the born again Christian beliefs, Murdoch retains his pragmatism and his ability to see where his profits are coming from.

So the message from Rupert is not vote McCain. It is now,  don’t give Obama and the Democrats too big a majority.

Because, although Murdoch is no lover of banks, who were not very nice to him, when he was struggling to stave off bankruptscy, he realises that he cannot go on making his millions, if the banks collapse.

A lot can happen in eight days. And the issues which face US electors on polling day may not be those we are thinking about today.

But what is absolutely certain is that the worries about the banking crisis will not be resolved before November 4. It is not such a surprise that Gordon Brown, with his roots in Old Labour has nationalised the banks. But the fact, that George W Bush, the disciple of Thatcher and the believer that God not only rewards the faithful in the hereafter, but makes them rich on earth, has been forced to do the same.

The world is indeed very different, from what it was a few weeks ago. And it is comforting that Bush and Brown and the European Community, are reacting with the knowledge of what happened in 1929 and how John Maynard Keynes and Franklin D Roosevelt steered America and the world out of the depression.

But what we are facing today, although quite as serious as the Great Depression, is not just the same. It needs a different approach.

Which will be the subject of a later blog.

But meanwhile, if you are American, vote Obama and vote Democrat. Because neither McCain, nor the Repbublican Party has the frameworks of thinking that enable them to begin to think out the solutions.

Because those solutions violate their honestly held beliefs in their own doctrines.

Spend, you Guardian readers, spend

Friday, October 24th, 2008

Since writing my posts this evening I have read an article in The Guardian by Jenni Russell. It was headlined, Consuming Anxiety. But it is the nearest article that I have read to what I was writing myself.

Many other articles in The Guardian, and other serious newspapers read mostly by the middle classes, have been giving them all sorts of hints about how they should be cutting down their spending to deal with the recession, which, at last, the boom for ever lot have agreed is now upon us.

Guardian readers, although they probably do not include many of the super rich, are mostly comfortably off. More of them, than the readers of The Times and The Daily Telegraph, work in the public sector. Which is less at risk (but certainly not immune from risk) in the coming recession.

Some Guardian readers are students, with expectations, rather than money. Others have huge mortgages. But some of them are financially secure. Who do not get their satisfaction from conspicuous consumption.

Although they enjoy the good life.

Now is the time for them to spend, spend, spend with a clear conscience. By doing so they are helping the global economy.

What US citizens can do to stop the panic

Friday, October 24th, 2008

The answer is quite simple. Vote Democrat.

This is not only because the Democratic candidate, Barack Obama, has demonstrated beyond all doubt that he has a clearer mind of how to cope with the current financial crisis, than the Republican candidate, John McCain.

It is because the Democratic Party has the right ideology and the right policies to deal with the present crisis. What the US and the world needs to deal with this global crisis, is someone from the same stable as Franklin D Roosevelt.

What citizens can do to stop the melt-down

Friday, October 24th, 2008

The cause of the present melt-down is the un-regluated free market ethos, introduced to the world by Margaret Thatcher is Britain in the 1980s, and taken up ethusiastically by American Presidents. First Ronald Reagan and more recently, George W Bush.

This has taken the world from the excesses of over-optimism which continued for over a year, when the economists were warning of the dangers ahead, first signalled by the problems in the US housing market, which was in crisis because the banks had encouraged people to buy far beyond their means.

Now, in the space of a few weeks, the money men have led the worlld into excessive over-pessimism.

The best way citizens can help governments to stop this spiralling panic, is to spend. And spend now. Don’t wait til next year, when you might possibly be able to buy a new home, or a good second hand anything more cheaply.

So don’t put off building that new extension, order it now. Go off on the holiday of your dreams. Etc. Etc.

This only applies to those citizens who can afford it. Which includes many middle class people whose jobs are not in danger and who have savings.

And of course it applies to the new super rich who have benefited most from the excesses of the last thirty years.

Now is the chance for them to spend their not very well-gotten gains. And spend it in ways that give employment to those who do do decent day’s work for a fair wage.

Capitalists of the world unite. Spend now. You have nothing to lose but the chains of your beliefs.

Do not ask yourself what the world economy can do for you. Ask what you can do for the world economy.

The fiancial men who are fuelling the panic

Friday, October 24th, 2008

Today has been yet another Black Friday, with Far Eastern stock markets plunging by between 8 and 12 per cent. This provoked further falls in London and on Wall Street, after a few days when it seemed the markets were steadying, following the injection of vast sums of money into the banking system, by governments in the US, Britain and Europe. But some financial men seem determined to to urge the market on and drive the markets done even more steeply than in the Great Crash of 1929.

Stand up Martin D. Weiss, Ph D.

In his newsletter today, headlined:

Urgent Warning: Crash Today!

he boasts that in July he predicted the Dow Jones would fall to 7200.

He writes piously

I prayed it would not come to pass, but now that it’s here…

He then goes on to say that he does not think that 7200 is the bottom. Investors must expect further falls. So he urges them to sell half their holdings of equities and mutual funds immediately. If big investors followed his advice that would indeed produce a bigger crash than 1929.

I am not going to predict how far the Dow will fall, nor how long and deep the recession will last.

But before you follow Dr Weiss’s advice, I would ask you to note his prediction of the Dow at 7200 is not yet here. With most of the day over the lowest point the Dow reached was about 8200.

It was financial men like Weiss, who drove the stock markets up to astronomic levels on the assumption that the boom would go on ever. Now they are trying to profit by urging the market down.

It is up to rest of us to stay cool. And it is up to Governments to give a clear message to the financiers, the banks and the big companies, that, they, like all other citizens, need regulation.

Below is the Weiss newsletter in full. In my next blog I will suggest a few things that ordinary citizens, like me and my readers, can do to reduce the severity of the recession.

 
 
 
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Urgent warning: Crash TODAY!
by Martin D. Weiss, Ph.D. Dear Subscriber,

Right-click here to download pictures. To help protect your privacy, Outlook prevented automatic download of this picture from the Internet. Martin D. Weiss, Ph.D.

Today could go down in history as one of the worst stock market crashes of all time, and it gives me no pleasure to see my dire warnings come true. I have dreaded this day as often as I have predicted it.

In July, our Safe Money Report declared the Dow would fall to 7,200. And virtually every day since, our e-mails have warned, nagged, cajoled and shouted the same message from the rooftops.

I prayed it would not come to pass. But now that it’s here, I have a new prayer …

That you are out of danger and ready for the worst;

That the worst will strike swiftly and end swiftly;

That, once we hit bottom, no matter how ugly the future may appear, you, we and others will have the fortitude to reinvest, help get the country back on its feet, and move on to better times.

Today and for the foreseeable future, however, the market is going down. Asian stock markets have crashed this morning. The global economy is sinking rapidly. Deflation is sweeping the globe.

(For more on deflation, be sure not to miss the important alert we sent you yesterday, as well as my October 6 issue “Sinking Rapidly into Depression.”)

Yes, our long-standing forecast for this phase of the decline is 7,200 on the Dow. But do not assume that will be the final bottom.

With a global depression striking rapidly … with most U.S. corporations likely to sink into the red … and with many going bankrupt … it would be foolish to expect that any line drawn on any chart can be a reliable barrier to further sharp declines.

In his testimony before Congress yesterday, former Fed Chairman Greenspan confessed that this financial crisis may be the worst in 100 years. If that’s the case, then it’s not beyond the realm of reason to anticipate a stock market decline that’s also among the worst in 100 years.

If you are not ready — if you followed a broker who told you to just “buy, buy, hold, hold” — here’s what to do:

Step 1. Call your broker immediately and tell him to sell HALF of your stocks and stock mutual funds at the market. If he tries to talk you out of it, don’t let him. And if you’d like to be prepared for the counter-arguments he may give you, see my September 30 issue, “Urgent from Martin: Your Last Chance to Act.”

Important: Do not be deterred by any trading halts if they should occur. Today, for example, if the Dow Jones Industrials falls 10% (869 points) prior to 2 PM Eastern Time, the New York Stock Exchange will declare a one-hour trading halt.

Alternatively, if the Dow falls the 10% between 2 PM and 2:30 PM, the NYSE will declare a half-hour trading halt. However, after 2:30 PM, the 10% limit will no longer be in effect. Therefore, even in a worst case scenario, there should be ample opportunity for you to execute your orders to avoid further damage.

Step 2. We may get a sharp rally at any time, especially if the government intervenes. If so, use it as your opportunity to sell the balance. This is where I believe your broker or adviser can be of value to you, helping you set exit price targets (limit orders) and giving you his opinion regarding how much of a rally might be reasonable to expect.

Step 3. If you are working with a money manager, ask if he has strategies specifically designed to profit in bear markets. If the answer is “yes,” switch the amount you and he feel are appropriate to that strategy, erring on the side of more rather than less. If the answer is “no,” ask him to follow steps #1 and #2 above. Then, move your funds to a manager who does deploy bear market strategies.

(For more information on bear market strategies, see Bear Market Defense Forum Transcript Part I and Part II.)

Step 4. Just because your money is in cash, don’t assume that cash is safe. There’s a real chance the global banking bailout will fail.

(For the reasons, see our recent whitepaper submitted to Congress on September 25, “Proposed $700 Billion Bailout Is Too Little, Too Late to End the Debt Crisis; Too Much, Too Soon for the U.S. Bond Market.” Also see our recent Congressional submission, “Many Banks and Thrifts Overly Reliant on ‘Hot Money’ Deposits: Why an FDIC Coverage Increase to $250,000 May Not Stop Bank Runs and Could Cause Other Collateral Damage.”)

If the global bailout does fail, as I fear it will, an international banking holiday could ensue, trapping your cash when you may want or need it the most. To avoid this danger, move as much of your cash as you can to U.S. Treasury bills or a Treasury-only money market fund. (For more information on how to buy Treasury bills, be sure to watch our 1-hour emergency Q&A video and read this recent message from our affiliate.)

Step 5. If you continue to hold stocks that you’re unwilling or unable to sell, carefully consider the instructions in my November 2007 report, “How to Protect Your Stock Portfolio From the Spreading Credit Crunch.”

Step 6. A crisis like this one can be a nightmare for nearly everyone. But crisis is also opportunity — for the country to heal itself and for you to build your wealth.

Investors who have followed our recommendations to use contrarian investments are doing just that right now. The more the market falls, the more money they make. And since markets usually fall faster than they rise, the speed and magnitude of the potential profits are among the greatest of any time in modern history.

In 1929, my father borrowed $500 from his mother and used it to sell short the stock market. He told me that, by the time the market hit bottom, he had close to $100,000. And he didn’t start before the crash; he actually began in April of 1930 after the ‘29 crash.

Today, fortunately, you don’t have to short the market to make money in a crash. You can use investments that limit your risk and require no borrowing or margin.

Consider these strategies for a portion of your funds. You can do it on your own. Or, if you’d like some guidance, call or write.

The number of Weiss Research’s inverse ETF trading publication is 800-393-1706. Or, for a managed account program dedicated to bear market investing, call our separate affiliate at 800-814-3045. They can also advise you on how to exit the market in an orderly fashion.

No matter what, do not delay. But also do not act in panic. Your response to this crash should be both prompt and planned; both bold and prudent.

And no matter how bad the future may appear, do not forget what I have been saying from the outset: This is not the end of the world. Our country has been through worse before, and we survived. We will survive this time as well.

Good luck and God bless!

Martin


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America is a headless chicken…

Friday, October 17th, 2008

….flounderin arouni it the farmyard, with no idea of where to go.

In the last two weeks George W Bush, has had to depart from his free market doctrine and temporarily nationalise some of the country’s leading banks. But the free market verdict on his rescue plan has been a resounding thumbs down. Stock markets have continued to plunge, with further falls of around 6 per cent in share prices in the Far East, who get up before we do in London, and a similar fall in London.

Wall Street opened with further stock market falls, explained by the analysts, as a result of investors facing up to the real economic data, with falling retail sales figures, and the prospect of rising un-employment. But in te last hour of trading today, Wall Street soared over 400 points. Other investors poured in, deciding that the fall had been overdone!!!

Last night, in the last of the three Presidential debates between Barack Obama and John McCain, the media verdict was that McCain had not done well enough to dent the lenghthening lead in the opinion polls Obama has enjoyed since the financial crisis started to bite. Fourteen points ahead was the favourite figure. And the polls taken after the television debate all showed a resounding lead for Obama with viewers who watched the debate.

But today’s poll from the veteran pollstter Gallup, gives Obama only a four point lead. And his lead with vaters who said they were most likely to vote was only 2 per cent.

Well within the pollsters’ marggin of error. So if Gallup is right, the US election is still wide open. Far from the walk-over several media pundits were  talking about earlier today.

For most of the rest of the world, it is obvious that the current crisis demonstrates that the un-regulated free market, ushered in by Margaret Thatcher and echoed by Ronald Reagan has got the world economy in a terrible mess and left home owners and small busineses with the threat of bankruptscy and repossession. It has caused several leading banks to fail.

But there are still lots of Americans who don’t want to give up on era of Thatcherism, where a few people got very rich indeed. And thereby confirmed the myth that anyone in the US, however poor, could rise to the ranks of the super rich.

In the last of the great debates McCain did not deliver any knock-out blows. But he showed that he was a fighter, a man Americans can  rely on to sort out upstart states like iran and old enemies like Putin’s Russia.

His credentials for piloting the US in the current financial crisis are not obvious. But for some Americans he is is infinitely preferable to Obama, a black man with a foreign sounding name, who is the same race as the Muslim terrorists. In the debates and in his campaign McCain is trying to smear Obama as a closet terrorist, by focussing on the fact that he knows and sits on the same board as a former radical lefty ‘terrorist’ who is now a university professor. Obama is portrayed not only as a socialist, but a socialist who joins with ‘terrorists’ to prosecute armed revolution.

This was not credible for anyone who watched the debate or who has listened to his speeches. But as this battle for the Presidency nears its end, it may play with some voters.

This election is not a foregone conclusion. And there is also the fact that Obama is black which raises all sorts of fears and antagonisms amoungst the white working class.

This election is not a walkover. The world can see the need for re-regualtion of the American banking system. But despite the present havoc, and the blight it brings to many ordinary Americans, there is still  powerful support for the Thatcher/Reagan myth.

America is a headless chicken, because George W is at the end of his power. And there is a real difference between the two contenders for the crown. We will not know until November 5th whether the new leader is going to a less doctrnaire version of George W, worshipping in the church of the unregulated free market, or someone who realises that the complexities of the global economy require a less simplistic approach.

But today’s figures from Gallup, one o

This is NOT a repeat of the 1929 Great Crash - Part Two

Wednesday, October 15th, 2008

Since I wrote the first part of this blog, as recently as last Friday, the stock markets of the world have been down and up like a yo-yo. And the world’s journalists have been - hour by hour - trying to make sense of what is happening.

With difficulty.

While i was writing on Friday, the markets were plunging. And over the weekend many of the media commentators were saying that this was indeed the most serious panic since 1929. Markets continued to fall on Monday, but on Tuesday they staged a sparkling recovery. Today, they have plunged again.

I have every sympathy with journalists who are working around the clock to make sense of what is happening. Their problem is that history never repeats itself exactly. Their problem is now, is also, which facts do you report?

Do you report what the economists and financial journalists or saying? Do you try and make sense yourself of what political leaders are saying and make a judgement about the trilions of government money being ploughed into the markets?

No-one, political leaders, economists, veteran journalists,, can be sure about what is happening today.

But we can be reach quite a lot of agreement about what happened in 1929.

 That crash happened in the first year of the Republican administration of Herbert Hoover. Hoover reacted by tightening the purse strings which made things worse. Which led to the depression of the 1930s and which in turn led to the election of the Democrat Franklin D Roosevelt in 1932. With his New Deal policies which is the nearest thing to socialism in American history. Pumping government money into the economy and providing jobs for the growing body of the unemployed.

It took several years but Roosevelt’s policies took the world out of the Depression. And both Britain and America became wedded to the mixed economy.

Not pure capitalism.

Not communism or even socialism.

Until 1979 when Margaret Thacher took over as Prime Minister in Downing Street on an agenda which rejected the consensus and applauded the supreamacy of the market and free market capitalism. She was follewed by Ronald Reagan, who brought the same verities to the USA. Thatcher thinking ruled Britain, and led to the New Labour of Tony Blair and Gordon Brown.

In the US Bill Clinton interrupted the trend, by moving back to the notion of a mixed economy and an American foreign policy based on dialogue with the other nations of the globe.

Al Gore, who took up his mantle, was defeated by a wafer thin majority by George W Bush, who voiced the fervently held opinions of an important American minority the right wing Christian/Republicans.

They have ruled the world for the last eight years and taken us into the Iraq war and the financial crisis, which has left home-owners in the US and Britain in danger of having their houses sold over their heads.

George W has in the last few days done a u-turn, the biggest u-turn, in history. By effectively nationalising a chunk of the US banks.

But unlike Hoover in 1932 George W has less than a month before the next election. And the Democratic champion Barack Obama has since the financial crisis of the last two weeks lept to a 21 per cent lead in the opinion polls.

This analysis obviously is based partly on my opinions.

But the plain facts are that on November 4 America will have a new leader. And unless things change again (which they may do) that leader will be Barack Obama.

America will have a leader who is committed to the mixed economy, who is an admirer of Franlin D Roosevelt and who believes that the way forward for America is dialogue with other countries in the world, rather than telling them that the US way is best.

So maybe the 2008 Great Crash is not the death of American consumer capitailsm. Merely the death of Thatcherism and the right wing Christian Americans who put George W in the White House.

And maybe Barack Obama will go down in history as the President  who fulfilled the aspirations of that great Republican Abraham Lincoln, who freed the slaves. Maybe on November 5 we will all wake up to know that the voice of America is the voice of one of America’s blacks.

US election: 2008 compared with 1968

Wednesday, October 15th, 2008
Godfrey Hodgson looks back at the most important US election before this one, 1968 when Richard Nixon won the White House.
In the first week of November, forty years ago, I was debating with a colleague which of us would spend election night in New York with Richard Nixon, the Republican, and which in Minneapolis, with Hubert Horatio Humphrey, the Democratic candidate.
I won: I got to go to Minneapolis. And I lost, because so did Humphrey.

 With Hilary, who is now my wife, and was then working with me as a researcher, we allowed ourselves a brief holiday in Saratoga, not much more than a weekend. We thought of Adelaide’s Lament in Guys and Dolls:

 When they get on that train to Niagara
And she can hear church bells chime
The compartment is air conditioned
And the moon sublime
Then they get off at Saratoga for the fourteenth time!
A person can develop la grippe,

Then we settled down, in the old Times Newspapers of Great Britain offices on the corner of 42nd Street and Third Avenue, to the hardest work of a lifetime.

The result was a book, published as An American Melodrama, that changed my life. It made a lot of money, though not for me. I was working on the staff of the Sunday Times, and the paper owned the rights and took the profits. But ever since I have been hired by publishers in New York to write a string of books about American history and politics. But the election also changed life for 300 million Americans too.

 We were in our early 30s then, and capable of working in a way that gives me nightmares even to remember. We had to get the book out before Teddy White, the reigning champion for election books, did. We had an extra reason for beating him. White came up to me at a friend’s house and said, unprovoked, “So you are one of the three wise monkeys who think if you type enough you write Shakespeare?”

We typed, all right. I and my two co-authors, Lew Chester and Bruce Page, produced a book of 789 pages in about six weeks. We frequently wrote all night. I remember one particular evening when, after 12 hours at the typewriter, we staggered out of the office and walked up Third Avenue in the snow into P.J. Clarke’s bar, a classic New York Irish watering hole, where the waiters wore green aprons and you peed on blocks of ice in the gents. We stayed there until four a.m., first eating, then drinking, and at all times arguing, before slumping into bed for a few hours and then back to the typewriter in the morning.

That Heraklean labour was the culmination of a year covering what was the most exciting and the most important American presidential election — until this one.

 1968 began with all the interest on the Democratic side. Succeeding the murdered Jack Kennedy, Lyndon Johnson had thrown his titanic energy into passing the civil rights bill of 1964. He followed it with the Voting Rights Act of 1965. As he signed it he murmured to an aide, “There goes the South”, and that when the Solid South, Democratic ever since Lincoln freed the slaves, turned Republican.

 Johnson tried to end poverty in America, and committed America to victory n Vietnam. By early 1967, he was deeply unpopular. Surreptitiously at first, then more boldly Democrat operatives were looking for a plausible candidate to challenge Johnson. They talked to John Kenneth Galbraith, but he was foreign-born, in Canada. They talked to Martin Luther King, but he would not do it. They canvassed liberal senators, but none would risk their career against an incumbent president who seemed invincible, until they persuaded senator Eugene McCarty to run.

 McCarthy (who had nothing but Irish blood and Catholic faith in common with the other McCarthy, senator Joe) was a liberal Catholic, a poet, and an unpredictable politician. My colleagues, freshly arrived from London, saw him as a man of the Left, and it was true that many of the most idealistic young people in America joined his “Children’s Crusade”. I knew, however, because I had been working in Washington before, that McCarthy had infuriated liberals by his systematic cosying up to the big oil and gas interests.

 The great question for the American Left was whether Bob Kennedy, who notoriously detested Lyndon Johnson (a book about their relationship was accurately entitled “Mutual Contempt”) would enter the race. If he did, he would be a stronger candidate than McCarthy, an obvious fact which McCarthy’s supporters, some of them close friends of mine, hated to hear.

Then, on March 12, a psephological bomb exploded. In the New Hampshire primary, which normally an incumbent president would have been expected to win easily if he even bothered to enter, President Johnson got 49 per cent of the vote. And senator Gene McCarthy got 42 per cent.

Nineteen days later, Lyndon Johnson inserted two sentences at the end of a nation-wide television speech. “I have concluded”, he said, “that I should not allow the presidency to be involved in the partisan divisions that are developing in this political year. Accordingly I shall not seek, and I will not accept, the nomination of my party for another term as your president”.

After soul-searching, cold calculation and many changes of mind, Bob Kennedy entered the race. I went with him to California, when he first sussed out his chances. I tried to describe the extraordinary yearning for the crowds who surrounded him when he spoke from the back of a flatbed truck. In a pyramid of uplifted arms. I was with him again on June 4, when he won the California primary, and looked set to win first the Democratic nomination, and very possibly the election. I was in the hall when he gave his last speech, and I and a colleague were due to interview him, when he was murdered in the adjoining hallway by a Palestinian, Sirhan Sirhan.

What we largely ignored in the excitement of that tumultuous election, was the real import of the 1968 election.

 It was Richard Nixon who won. And Nixon’s victory marked the end of 35 years of Democratic hegemony in American politics, and the beginning of 40 years of the conservative Republican ascendancy.

To be sure, Nixon’s domestic policy turned out to be more liberal than many expected. But Nixon won, in 1968 and far more decisively four years later, in large part because of his “southern strategy”: by appealing, that is, to white southerners to abandon their Democratic inheritance and vote Republican.

 Six years after his 1968 victory, Nixon was gone, just ahead of impeachment. The immediate result was a brief recovery for the Democrats. But then came Ronald Reagan, a more robustly ideological conservative. Only when Bill Clinton, parroting Reagan’s language about the end of the need for strong government, but also insisting that it was “the economy, stupid”, took advantage of George H. W. Bush’s failure to read the national mood, did a Democrat return to the White House.

 This year, forty years after 1968, the issue was whether the conservative ascendancy would end. Was this what the political scientists call a defining election? Now a Republican administration had got the nation into a disastrous war, had shown itself comically incompetent in dealing with Hurricane Katrina, had favoured its rich constituency with unfair tax breaks in a shameless way?

 For months, it seemed as if an opportunity for decisive, ideological change, would be missed. Senator Barack Obama called for change. It was his slogan. But in practice, as he competed for votes with senator Hillary Clinton, just like senators McCarthy and Kennedy in 1968, the election seemed bogged down in technicalities. Who could raise the most money? Who could spend it most effectually in caricaturing the policies and the personality of the rival?

Then like Nixon in 1968, after the disaster of senator Goldwater, the Republican overwhelmed by Lyndon Johnson in 1964, senator John McCain rose from the ashes. Now, days before the vote on November 4, senator Obama is ten percentage points ahead. Republican economics have brought the American economy and the world economy to the very brink of catastrophe. Now all that can save the conservative ascendancy is crass innuendo with coded racism from senator McCain’s desperate running-mate.

 Will it work? Will we see a “Bradley effect”? That is the name, drawn from the fate of a black mayor of Los Angeles, who led in the polls and lost on the hustings, for the American voters who will tell pollsters they will vote for a black candidate, but don’t when they or pull the lever of a voting machine. Poor Tom Bradley is not the only example of that sadly prevalent electoral habit.

So, forty years after Dick Nixon came up on the rails to pip Hubert Humphrey, once again the American electorate faces a choice between ideological optimism — what Barack Obama calls “the audacity of hope” — and shameful, surreptitious racism. It has happened too often before in American elections, local, state and national.

Will Barack Obama make it to Niagara, so to speak? Will the nuptials take place? Or are we going to get off at Saratoga, for the fourteenth time?

In other words, as poor Adelaide sang,

“Just from worrying if the wedding is on or off
A person can develop a bad, bad cough.

 

 

 

This is NOT a repeat of the 1929 Great Crash

Friday, October 10th, 2008

We - that is most human beings living their lives, while the stock markets are crashing - go into this weekend, fearing that the world may be facing a crisis comparable to the Great Crash of 1929, which led to a world-wide recession for several years. Because the stock markets have gone on falling despite what has been done to deal with the financial crisis.

This financial crisis - like that of 1929 - is due to the combination of the volatile stock markets and the influence of the mass media, who magnify what is happening on the stock markets. So people everywhere become fearful, withdrawing their money from the banks. And also by doing nothing. Because of the uncertainties. Not buying new houses. Not buying new cars. So The Guardian today tells me that both of the high priests of American consumer capitalism, General Motors and Ford, are thought to be in danger of going bust!

The facts are that in 1929 America was governed by the Hoover administration, which reacted by looking after the tax-payers’ money. The recession was not stemmed until Franklin Roosevelt took charge in 1932, and pumped government money into the economy.

Three years after the Great Crash.

In the last few weeks governments, including the present administration of George W Bush and the British Labour government and the EC leadership, have shown that they have learnt the lessons of the 1929 crash.

But the stock markets are continuing to plunge. Because the public are fearful. And because, amongst the financiers, with their huge bonuses on top of their salaries, are selling shares short.

They are still trying to make money, out of the current debacle. By speculating in the hope that they can make their fortunes, out of a situation which frightens the average citizen out of their wits.

That is why we are all in for a fearful weekend.

But the reality is that the behaviour of Governments in the last few days, has shown that Governments - and their advisers, who include a lot of people who have studied the reasons for the 1929 Crash - say that our present situation is quite different.

The world is not collapsing. American consumer capitalism is not dead. But it needs continual reform. So that the dreams of Margaret Thatcher, Ronald Reagan and George W Bush are not a stable basis for builiding the world of 2008.

The world will only have to wait a few weeks - not three years - to find a viable solution to today’s problems.

On November 4 the US votes for a new President. They can either vote in Barack Obama, who is an admirer of Franklin D Roosevelt. Or they can vote in John McCain, who thinks that his war experience fits him to be President, because some upstart like the President of Iran, or the inheritor of the Soviet Union, Vladimir Putin, might launch their military might against the US.

Possible.

But not very likely.

The real threat is that stock market panics will push voters to panic as well.

The world, as we know it, is not collapsing.

But it requires clear headedness on the part of our leaders. And an understanding of the economic verities.

And that is where John McCain is woefully inadequate. Barack Obama, although years younger, has read it all in books. And in books written by the scholars of the world.

We are currently facing a PANIC.

Because far too many people have believed in the dreams of Thatcher and Reagan. That we could live a Hollywood dream in which everyone lived happily ever after. If only they worshipped at the shrine of the unregulated free market.

The lesson of the Great Crash of 1929, is that the free market, despite its manifold advantages, needs regulation.

I rest my case.

Thatcherism is dead

Wednesday, October 8th, 2008

This is the good news, which should be listened to, against the clamour of the media focus on the collapse of capitalism as we know it.

The banks of the world are bust. Because they have encouraged people to buy what they cannot afford.

Thereby betraying what I was told was the duty of the banker. To tell his client what was prudent, rather than what he might achieve if the dice rolled his way.

 

The unregulated financial economy, pushed by Thatcher and supported by Reagan, is now seen to be a Hollywood dream.

Now, the banks, and the whole world, is faciing a tomorrow, which may be worse.

At least temporarily.

So throughout the world the banks, in order to survive, had had to rely on governments.

It will take a long time for the economists to come up with a theory to explain this. John Maynard Keynes explained the 1929 crash. But the bankers since then, have discredided him.

They thought that the economy of ever increasing goodies was possible.

But they are now bust.

Surviving with Government money.

Not Thatcherite free enterprise capitalism. But a Democrat New New Deal. And Gordon Brown’s version of New Labour.

At the time of re-writing this the stock markets are still sliding. But come next week maybe they will realise that the present crisis may lead to a better regulated world, in which governments and businessmen work better together to steer us away from boom and bust economics.