by divorced one like Bush
Updated comment at end

So, now that the Democratic Party has the majority and the White House, why am I not hearing about the use of the Nuclear Option? I mean, it occurred to me that if there was a way to end the partisan old ways, the Nuclear Option is it. It sure worked well for the Bush administration. You need 60 votes? Bring in the non-executive executive senate menber: Biden. Oh, you think there needs to be a tie to be broken before our hatchet man can be used? Well I have news for you. Being that everything comes down to breaking the 60 vote line to get anything done, by precedent of calling for a record number of filibusters the Republicans have set the new definition of a tie: 59/41. Biden makes it 60/41.

This gets me to the trust issue and I'm going to toot my own horn here for those who think human capital is bunk regarding getting us out of this mess. (Did I mention the flower shop was off 13% for Christmas and 45% for January? Yeah, I got skin in this game.)

Seems on the same day I posted my message to the Republicans and the Blue Dogs, a man officially of the economic science posted on the same subject (via C & L via Naked Capitalism).
Willem Buiter.

Here is what I said:

The greatest harm that is coming from the republican's drive to instill their minority will on the many out of selfish want, is to further the demise of the people's trust. For the blue dogs it is their ignorance of their economic ideology that creates the mistrust. The republicans/blue dogs, and those helping them by lending their "professionalism", think they are only effecting a political strategy. In truth, they are destroying the very basis for the wealth they desire. Their entire campaign for decades to discredit, to instill mistrust in the primary institution we have, the US (We the People) government, has been the primary cause to our economic decline. To increase the level of distrust is to decrease the available “intangible capital” which is 77% of our wealth generating power.

Here is Willem Buiter:

As part of this widespread erosion of social capital, both citizens and markets lost faith in the ability of governments to commit themselves to any future course of action that was not validated, at each future point in time, as the most opportunistic course of action at that future point in time - what macroeconomists call time-consistent policies and game theorists call ’subgame-perfect’ strategies.

This morality tale has important consequences for a government’s ability to conduct effective countercyclical policy. For a fiscal stimulus (current tax cut or public spending increase) to boost demand, it is necessary that the markets and the public at large believe that sooner or later, measures will be taken to reverse the tax cut or spending increase in present value terms. If markets and the public at large no longer believe that the authorities will assure fiscal sustainability by raising future taxes or cutting future public expenditure by the necessary amounts, they will conclude that the government plans either to permanently monetize the increased amounts of public debt resulting from the fiscal stimulus, or that it will default on its debt obligations.

Mr. Buiter is prescribing a different solution to the lack of trust than what I'm going to suggest. He thinks more money to the banks is needed to promote lending. Well, isn't that kind of giving to those you know you can not trust, not to mention just adding to the debt that he notes no one seems to want to consider? He did state the following as part of his “morality tale”:

During the decade leading up to the crisis, current account deficits increased steadily and became unsustainable. Strong domestic investment (much of it in unproductive residential construction) outstripped domestic saving. Government budget discipline dissipated; fiscal policy became pro-cyclical. Financial regulation and supervision was weak to non-existent, encouraging credit and asset price booms and bubbles.

Hope was the word. Trust is the need. I've seen and lived what the Republicans and Blue Dogs can do. I'm willing to take a chance for the benefit of building future trust, thus building with the 77% of our power, thus nurturing hope, and let Obama send in Biden to the Senate. Hell, maybe it's time they come up with the unitary vice executive theory and take it for a spin in the Senate! In-other-words, my solution is for Obama et al to just take god damn control and do what they want, then we'll have something to compare to along with "Republican brand" bipartisanship. We can decide come November 2012 how the brands compare. (Catch that “bringing business to governance” lingo of how to speak civics?)

We survived the last 4 years, we know where we'll be if we keep going as we are (no thanks to our free press), so I say let the Dem's pull a republican move: redefine what a tie is, have the Obama's legal council write up the unitary vice executive theory and send in Biden to the Senate.

I trust that it will not be worse than what we have now. And that, "my friends" is using our fullest economic power.
Almost forgot: Can we please broaden the discussion now?

Update: Two commentors noted that the tie break may not work as I suggested. RonE notes there is no need for the 60, just change the rules to a simple majority. TStockmann notes that we would not get all the Dem's to go along. I assumed the Dems would act tribal if they had someone to lead them, that is what is needed when you are fighting another tribe You can't beat the other tribe by acting all independent thinking virtuous as to the ideal bipartisanship.

But here is where my plan works. We're going to have the unitary vice executive who is president of the Senate just as soon as Obama has his attorney write it up. Or, maybe Biden should just have his attorney write it up ala Cheney. Then, he goes in and changes the rules (because he's the Unitary Vice Executive President) to a simple majority, we're golden.

by Divorced one like Bush

February 26, 2008 I posted a question: How are we going to fix a money from money economy. Quoting that post: There is a nice chart. (A few actually). Especially this one."

And this:

Total financial turnover went from $17,804 billion in 1980 to $508,456 billion in 2000. We've seen GDP go from 37.8% of turnover to 1.9% of turnover. That's how big the money from money train is. Our GDP is only 1.9% of the money from money machine.”

The first response in comments was: "Fix what?"
I think that person has their answer now.

October 6, 2007 I posted: Money from money, not good.

It was about an interview by Bill Moyers of John Bogle. He noted:

JOHN BOGLE: Well, it's gotten misshapen because the financial side of the economy is dominating the productive side of the economy...We've become a financial economy which has overwhelmed the productive economy to the detriment of investors and the detriment ultimately of our society.

I want to come back to the difference between the financial system and the productive system. The productive system adds to the value of our economy. And, by and large, the financial system subtracts. And, yet, it's growing and growing and growing. And this short term thing where short term orientation in which trading pieces of paper is regarded as a social value. It is not a social value.

Go listen to it. Then listen to Mr. Moyers latest interview with Kevin Philips.

But what's here that doesn't get the attention is the United States in the last 20 years undertook an enormous transformation of itself with no attention paid. And what it means is and what makes all this so frightening is the country is at risk because of the size of the financial sector that has never been graded on its competence and behavior in any serious way. They are the economy at this point. And we are now seeing what happens when a 20 to 21 percent of GDP financial sector starts to come unglued.
You had essentially a financial sector that, let's say, was sort of neck and neck with manufacturing back in the late 1980s. But they got control in a lot of ways in the agenda. Finance has been bailed out. I mean, everybody thinks this is horrible now what we're seeing in terms of bailouts. Even a lot of the people who do it think it's bad.

This has been going on since the beginning of the 1980s. Finance has been preferred as the sector that got government support. Manufacturing slides, nobody helps. Finance has a problem, Federal Reserve to the rescue. Treasury to the rescue. Subsidies this, that, and other.

I am certain we have to do something to help the money flow such that it does not take down the entire system. It would be cutting off our noses to spite our faces not to protect ourselves from what a few have done. We have to be adults, suck it up and clean up the alcohol aroma vomit all over our bathroom.

But, we do not have to let it happen again. There is only one solution to this and no one, not anyone is pointing it out: Put the financial sector of the economy back in alignment with the productive sector. What got us in this mess is our (well not all of us) belief that the financial sector can stand on it's own as a primary wealth/money creator. It can not. Never could. But, believing it put the impetus to the creation of “vehicles” for creating trades. You know all those securitized whatevers, and alphabet monikers, and insurance for insurance for insurance based on alphabet monikers of securitized whatevers. What did people expect would happen when you turn the part of your system that is dependent on activity in an other part for it's existence into a stand alone money creator. If you are going to keep generating money from money, then you are going to have to keep coming up with new “product”. New designs, new marketing to create an need and want, new packaging, BRANDING.
Again, Mr. Philip put's it this way:

But we've seen the central component of the rise of the financial sector is the rise of the debt industry. Mortgage, credit cards, all these gimmicks that Wall Street sells-- just all kinds of products. And, of course, the products are laying an egg all over the world right now.

Get it? We take an industry subservient to the needs of production and turn it into a competitor of production. I can polish and sell rocks without a bank to borrow from. I can accumulate wealth over time. My business may grow slowly and so may my wealth, but I can do it. But, remove all none financial activities and what does financial do to survive? What does it do to survive with no one needing a loan, backing, no desire to produce in a way that increases our productivity such that we have more time to purse happiness (that constitution purpose)? We treat finance as if it is the chicken/egg question. It is not. Finance came second and is dependent.

For those from the 80's, we have now learned exactly what was being said when we were told our economy was moving toward a service economy. We were told it was just as good, solid and viable as the producer economy so get trained and be ready. Remember that? Remember those who said no way, it can't work? Have you watched the movie Other People's Money yet?

Well, all we do now is complain about the cost of the service economy sector known as health care. It cost too much. And, we have now proven that the service economy sector known as finance can't create any real material wealth as a prime generator. So, why is no one talking about the need and means to realign our economy?

HOW MANY TIMES DO WE HAVE TO DO THIS? HOW MANY FREAKIN' TIMES DO WE HAVE TO LEARN THE LESSON?

According to Mr. Philips:

It's been a bipartisan phenomenon. You can go back to the 1980s and say Reagan and George Bush, Sr., got a bubble started. Clinton got in and got an even bigger bubble going. And then George W. Bush with the biggest bubble of all. But it's not that the Clintonites didn't play. They did. Bob Rubin as Secretary of the Treasury — I mean, if he was a Hindu and he was being reincarnated, he'd come back as a pail because this guy bailed out everything you can imagine. They had the Mexican loan bailout. They had the long-term capital management bailout, the Russian Southeast Asian currency bailouts.

Think about any of the concerns voiced here at AB regarding this current “crisis” and read Dean Baker's list of Principles for Restructuring the Financial System and ask how much of this could be accomplished by simply realigning our economy such that finance is in service to our needs of producing primarily and I guess consume in part. Putting it another way, none of what Mr. Baker is suggesting can come to fruition such that we protect ourself from repeating this experience for a 3rd time (fourth if you count 1987) unless we get our minds back to how true wealth and money are created. Which I happen to post on October 8, 2007: Human Capital is where it's at. It reports on a World Bank study from 2005 in which I us the quote:

The rest of the story is intangible capital. That encompasses raw labor; human capital, which includes the sum of a population's knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions. Worldwide, the study finds, "natural capital accounts for 5 percent of total wealth, produced capital for 18 percent, and intangible capital 77 percent.

All of this relates to some graphs I put up December 12, 2007 in: It's the big one honey, I know it, showing that personal income for the 99% had fallen below personal outlays since 1996. Something that had not existed since 1941 but was present from 1929 and before. What I found most interesting from that post was that there were only 9 comments. Just 9. Are we going to pretend income distribution is not part of this current crisis? Are we the 3 monkeys of see, hear, speak no income inequality?

So, we can talk about the hundreds of billions, we can total them up, we can debate ethics, we can talk morals and argue who is being partisan and what regulation is needed, what's fair or....we can face the fact that who we think we are is not who we are; that we have been blowing smoke up our own butts regarding wealth, money, economy and the pursuit of happiness. It's intervention time folks. Just putting up road blocks to the elixir's and potions, or setting up games with ourself without changing our world view about what money is and how wealth is created and why we want to create it in the first place won't cut it.

We use to know all this. It is represented in our Declaration of Independence and our Constitution. An example of the materialization of our realization was put in place in our tax code as we learned the lessons we are relearning now. For example, an instance of need of integration in our thinking, one issue with the current crisis is the mega pay of those that created the mess. Well, one of the reason's for having a graduated income tax to the point of 90% at the top was to prevent exactly what we are now discussing as one of the issues that needs to be addressed in the bailouts. It was to prevent economic royalty, to preserve democracy, to assure one voice – one vote, to prevent some from being so powerful that they would be insulated from responsibility for the problems they could create. But we're not hearing about taxing as a solution. One that worked very well because it addressed many of our goals. No, we now will create an entire new set of rules and paper filing...a new game to address one aspect of a crisis of one aspect of our economy because we have isolated taxation as an issue of personal freedom as oppose to an integrated tool of our economy based on our goals as laid out in our founding documents.

How small the discussion has been during this crisis so far.

by Divorced one like Bush

February 26, 2008 I posted a question: How are we going to fix a money from money economy. Quoting that post: There is a nice chart. (A few actually). Especially this one."

And this:

Total financial turnover went from $17,804 billion in 1980 to $508,456 billion in 2000. We've seen GDP go from 37.8% of turnover to 1.9% of turnover. That's how big the money from money train is. Our GDP is only 1.9% of the money from money machine.”

The first response in comments was: "Fix what?"
I think that person has their answer now.

October 6, 2007 I posted: Money from money, not good.

It was about an interview by Bill Moyers of John Bogle. He noted:

JOHN BOGLE: Well, it's gotten misshapen because the financial side of the economy is dominating the productive side of the economy...We've become a financial economy which has overwhelmed the productive economy to the detriment of investors and the detriment ultimately of our society.

I want to come back to the difference between the financial system and the productive system. The productive system adds to the value of our economy. And, by and large, the financial system subtracts. And, yet, it's growing and growing and growing. And this short term thing where short term orientation in which trading pieces of paper is regarded as a social value. It is not a social value.

Go listen to it. Then listen to Mr. Moyers latest interview with Kevin Philips.

But what's here that doesn't get the attention is the United States in the last 20 years undertook an enormous transformation of itself with no attention paid. And what it means is and what makes all this so frightening is the country is at risk because of the size of the financial sector that has never been graded on its competence and behavior in any serious way. They are the economy at this point. And we are now seeing what happens when a 20 to 21 percent of GDP financial sector starts to come unglued.
You had essentially a financial sector that, let's say, was sort of neck and neck with manufacturing back in the late 1980s. But they got control in a lot of ways in the agenda. Finance has been bailed out. I mean, everybody thinks this is horrible now what we're seeing in terms of bailouts. Even a lot of the people who do it think it's bad.

This has been going on since the beginning of the 1980s. Finance has been preferred as the sector that got government support. Manufacturing slides, nobody helps. Finance has a problem, Federal Reserve to the rescue. Treasury to the rescue. Subsidies this, that, and other.

I am certain we have to do something to help the money flow such that it does not take down the entire system. It would be cutting off our noses to spite our faces not to protect ourselves from what a few have done. We have to be adults, suck it up and clean up the alcohol aroma vomit all over our bathroom.

But, we do not have to let it happen again. There is only one solution to this and no one, not anyone is pointing it out: Put the financial sector of the economy back in alignment with the productive sector. What got us in this mess is our (well not all of us) belief that the financial sector can stand on it's own as a primary wealth/money creator. It can not. Never could. But, believing it put the impetus to the creation of “vehicles” for creating trades. You know all those securitized whatevers, and alphabet monikers, and insurance for insurance for insurance based on alphabet monikers of securitized whatevers. What did people expect would happen when you turn the part of your system that is dependent on activity in an other part for it's existence into a stand alone money creator. If you are going to keep generating money from money, then you are going to have to keep coming up with new “product”. New designs, new marketing to create an need and want, new packaging, BRANDING.
Again, Mr. Philip put's it this way:

But we've seen the central component of the rise of the financial sector is the rise of the debt industry. Mortgage, credit cards, all these gimmicks that Wall Street sells-- just all kinds of products. And, of course, the products are laying an egg all over the world right now.

Get it? We take an industry subservient to the needs of production and turn it into a competitor of production. I can polish and sell rocks without a bank to borrow from. I can accumulate wealth over time. My business may grow slowly and so may my wealth, but I can do it. But, remove all none financial activities and what does financial do to survive? What does it do to survive with no one needing a loan, backing, no desire to produce in a way that increases our productivity such that we have more time to purse happiness (that constitution purpose)? We treat finance as if it is the chicken/egg question. It is not. Finance came second and is dependent.

For those from the 80's, we have now learned exactly what was being said when we were told our economy was moving toward a service economy. We were told it was just as good, solid and viable as the producer economy so get trained and be ready. Remember that? Remember those who said no way, it can't work? Have you watched the movie Other People's Money yet?

Well, all we do now is complain about the cost of the service economy sector known as health care. It cost too much. And, we have now proven that the service economy sector known as finance can't create any real material wealth as a prime generator. So, why is no one talking about the need and means to realign our economy?

HOW MANY TIMES DO WE HAVE TO DO THIS? HOW MANY FREAKIN' TIMES DO WE HAVE TO LEARN THE LESSON?

According to Mr. Philips:

It's been a bipartisan phenomenon. You can go back to the 1980s and say Reagan and George Bush, Sr., got a bubble started. Clinton got in and got an even bigger bubble going. And then George W. Bush with the biggest bubble of all. But it's not that the Clintonites didn't play. They did. Bob Rubin as Secretary of the Treasury — I mean, if he was a Hindu and he was being reincarnated, he'd come back as a pail because this guy bailed out everything you can imagine. They had the Mexican loan bailout. They had the long-term capital management bailout, the Russian Southeast Asian currency bailouts.

Think about any of the concerns voiced here at AB regarding this current “crisis” and read Dean Baker's list of Principles for Restructuring the Financial System and ask how much of this could be accomplished by simply realigning our economy such that finance is in service to our needs of producing primarily and I guess consume in part. Putting it another way, none of what Mr. Baker is suggesting can come to fruition such that we protect ourself from repeating this experience for a 3rd time (fourth if you count 1987) unless we get our minds back to how true wealth and money are created. Which I happen to post on October 8, 2007: Human Capital is where it's at. It reports on a World Bank study from 2005 in which I us the quote:

The rest of the story is intangible capital. That encompasses raw labor; human capital, which includes the sum of a population's knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions. Worldwide, the study finds, "natural capital accounts for 5 percent of total wealth, produced capital for 18 percent, and intangible capital 77 percent.

All of this relates to some graphs I put up December 12, 2007 in: It's the big one honey, I know it, showing that personal income for the 99% had fallen below personal outlays since 1996. Something that had not existed since 1941 but was present from 1929 and before. What I found most interesting from that post was that there were only 9 comments. Just 9. Are we going to pretend income distribution is not part of this current crisis? Are we the 3 monkeys of see, hear, speak no income inequality?

So, we can talk about the hundreds of billions, we can total them up, we can debate ethics, we can talk morals and argue who is being partisan and what regulation is needed, what's fair or....we can face the fact that who we think we are is not who we are; that we have been blowing smoke up our own butts regarding wealth, money, economy and the pursuit of happiness. It's intervention time folks. Just putting up road blocks to the elixir's and potions, or setting up games with ourself without changing our world view about what money is and how wealth is created and why we want to create it in the first place won't cut it.

We use to know all this. It is represented in our Declaration of Independence and our Constitution. An example of the materialization of our realization was put in place in our tax code as we learned the lessons we are relearning now. For example, an instance of need of integration in our thinking, one issue with the current crisis is the mega pay of those that created the mess. Well, one of the reason's for having a graduated income tax to the point of 90% at the top was to prevent exactly what we are now discussing as one of the issues that needs to be addressed in the bailouts. It was to prevent economic royalty, to preserve democracy, to assure one voice – one vote, to prevent some from being so powerful that they would be insulated from responsibility for the problems they could create. But we're not hearing about taxing as a solution. One that worked very well because it addressed many of our goals. No, we now will create an entire new set of rules and paper filing...a new game to address one aspect of a crisis of one aspect of our economy because we have isolated taxation as an issue of personal freedom as oppose to an integrated tool of our economy based on our goals as laid out in our founding documents.

How small the discussion has been during this crisis so far.