Can the U.S. Recover Without Manufacturing?

[Swamp Gas]

atheonews.blogspot.com/2009/02/how-can-us-recover-without.html

February 25, 2009

How Can the U.S. Recover Without Manufacturing Capacity?

by Glen Ford

The strength of the federal economic stimulus package is seriously diluted by the fact that many of the manufactured goods that will be purchased for the attempted recovery must be imported from outside the United States. America simply doesn't make lots of things, anymore. That means many billions of dollars that folks assumed would go towards fueling an American economic comeback, will instead provide work and paychecks to employees in other countries, that still have manufacturing bases. That's fine with the U.S. Chamber of Commerce, which is dominated by large multinational corporations - the same guys that began stripping the United States of manufacturing jobs decades ago.

The U.S. Chamber of Commerce was one of the main lobbyists opposed to provisions that would have mandated that stimulus money go to U.S. companies. The Chamber is a U.S. organization in name only, like its finance capital comrades, the guys that gave the world such a bad case of the dreaded "American Disease," much of the planet is praying that cash-rich China will eventually bail everybody out.

The United States' lack of a manufacturing capacity makes it even less likely that anything resembling a lasting recovery can emerge from President Obama's approach to the economic crisis. The infrastructure projects that are supposed to be central to the recovery scheme are only valued at $150 billion - which is not much of a jolt, especially when much of what will have to be bought is only available in other countries, made by foreign workers. Barack Obama has put a huge emphasis on building a green economy. However, according to the New York Times, most of the sources of solar panels and wind turbines are located in Europe and Asia. There can be no green economy without a mass transit makeover of the United States, but the U.S. hasn't made subway and light rail cars in many years. They'd have to be imported.

Every product that must be imported for the infrastructure project means a watering down of the stimulus impact of the dollars spent. You can't put people to work in American factories that don't exist.

A true national recovery effort would mean re-industrialization, on a grand scale and a green model, through massive direct federal creation of state-owned industries independent of the finance capitalists who murdered American manufacturing and then blew up their own businesses on Wall Street. But this is already nearly impossible, since President Obama is committed to saving the banking class through unlimited infusions of public money, and then allowing these reborn zombies to resume their roles as lords of development. The bankster parasites have neither the capacity nor the intention to build anything other than mountains of debt for the rest of us. Therefore, Obama's partnership with them spells doom for national recovery.


Like Billy Preston said, "Nothin' from noth in' leaves nothin'."The U.S. cannot create the conditions for economic health without rebuilding a manufacturing capacity. And the remnants of Wall Street have nothing to contribute to an economic recovery, but an infinite capacity to steal.

[Swamp Gas]

www.rense.com/general85/whow.htm

Who Wrecked Your World Economy

Before Solving The Problem, One Must First Identify The Culprits

By Douglas Herman

2-25-9


So you looked in the mirror and you saw you were not to blame. You looked at the TV screen and saw the faces of the culprits. You studied the internet, you listened to talk radio shows and heard the outraged hosts cast blame and name names. You read the newspaper editorials and you knew, or thought you knew, who and what caused the global crash, and you knew it might get worse.

You knew it wasn't you, who wrecked the world economy. You knew it was someone without any scruples. You knew, or thought you knew, that the culprits must have skipped high school Civics class, or failed Ethics or World Religion in college or plagiarized their class assignments and cheated on their tests.

Mostly you knew YOU were not to blame. How could you be to blame, with your crummy little job? Besides, you always did your civic duty and voted in most elections. At least the elections that really meant something, the national elections and mid-term elections, when you felt smug and superior for voting for either the smoothest Democrat or Republican candidate.

You knew, in your heart of hearts, that gangsta rap and violent video games and strip clubs wrecked the world economy. How did you know this? Because highly paid talk radio hosts and local politicians and presidential candidates all said they did. You also knew that steroid-abusing, spoiled, overpaid sports stars wrecked the world economy. How did you know this? Because highly paid sportswriters and talk show hosts said they did. When they told you this, on those endless TV sports shows, you nearly tore up your season tickets in a fit of justified anger.

You knew that silicon-breasted models, like Pam Anderson and her PETA gang, wrecked the world economy. You knew that PETA and Greenpeace were far worse that the PATRIOT Act, because self-righteous talk radio hosts told you they were and you believed them.

You knew that Conspiracy Theorists wrecked the global economy. How? Because they eroded faith in public officials. Not that these public servants weren't beyond scrutiny but by wasting valuable time, discussing wacky ideas instead of contributing to the economy, these conspiracy theorists left America vulnerable to the next attack, which they endlessly predicted. You knew these sick people, sicker than gangsta rappers or spoiled sports stars, wanted the economy to fail. Why? Because they needed to fulfill some dark, pessimistic yearning or they had all invested in gold.

You looked in the mirror and you knew that religious nuts wrecked the economy. The ones who wanted to home school their kids.



You knew that gun nuts had wrecked the world economy. Why? Because they mistrusted the government for some reason, and kept mentioning Oklahoma City or Waco or Ruby Ridge or Randy Weaver, people and places you had never heard of before.

You knew that unions had wrecked the world economy. Why? Because union workers wanted better paying jobs and health insurance. These greedy bastards wanted a wage that was only 50-100 times smaller than the CEOs, instead of 500-1000 times smaller. You knew that all the jobs in America and Europe went overseas because of union demands and those greedy union officials, and thus these leeches helped wreck the world economy. How did you know this? Because highly paid talk radio hosts and wealthy elected officials said they did.

You knew that illegal immigrants wrecked the world economy. You saw them standing there by the road every day, silently wrecking the economy in their shabby clothes. You knew that somehow they snuck into the country, somehow bypassed the airport where the PATRIOT Act was enforced in full swing, and slowly wrecked the entire world economy with their sly offer to do all the dirty work. You just knew they were to blame. How? Because highly paid talk radio hosts and politicians told you they were.

You knew that greedy homebuyers were to blame. They wheedled those honest bankers out of all that hard-earned money, and bought houses they couldn't afford. For years these scammers had clicked on those flashy internet links that promised them $500,000 houses for $500 down. Then they took the money offered by Freddie & Fannie & IndyMac & Wamu and bought houses they hoped to flip because they watched that reality show, Flip This or That Old House, and conspired to wreck the world economy.

You knew that Libertarians, Anarchists, Independents and so-called Constitutionalists and all these other third party candidates had wrecked the world economy. You just knew it! You knew these wacky people were always the ones calling for increased accountability rather than trust in the Two Party system. And, thankfully, you knew that you had never handed them your hard-earned dollars, your sacred vote or heeded their wacky warnings.

These noisy rabble rousers always claimed that the Two Party system protected the ruling elites, protected bankers and Wall Street speculators from oversight or scrutiny, protected top intelligence chiefs and professional politicians and their lobbyists, protected Pentagon toymakers and corporate dons and ultra-secret societies, protected them all from too much scrutiny.

Of course, Thank God, the highly paid talk radio and TV hosts and Op-Ed columnists of the US mainstream media always lampooned these moralistic cretins. They belittled and taunted these nut cases with their wide-eyed messages that the entire ruling elite was somehow suspect. But this coalition of troublemakers, including people like Ron Paul, Ralph Nader, Cynthia McKinney, Dennis Kucinch, Bob Bowman, Uri Avnery, Dahr Jamail, Naomi Wolf, Wayne Madsen, Steve Lendman, Norman Finkelstein, Devy Kidd, Robert Fisk, Noam Chomski, Rob Moody, Jeff Rense, Alex Cockburn, Paul Craig Roberts, Michael Moore, Murray Rothbard, Sherman Skolnick, Jon Gold, Aidan Monaghan, Alex Jones and thousands of others just like them and their spawn, swayed enough believers.


And pretty soon, wouldn't you know it, the entire world economy was wrecked.

[Swamp Gas]

www.rense.com/general85/systemic.htm

Systemic Failure - Capitalism Lays An Egg

By Stephen Lendman

3-2-9


After the 1929 October 24, 28 and 29 market crash, the weekly entertainment industry magazine Variety (on October 30) published its most famous ever headline: "Wall Street Lays an Egg." In October 2008, history repeated, and since the October 2007 peak, equity prices plunged over 50% after the Dow and S & P (in February) posted their second worst ever monthly percentage declines - topped only in 1933 during the depths of the Great Depression. So far, the current market drop matches its 1929 - 1932 pace, and like then, shows no signs of abating.

With world economies collapsing, stocks are still overvalued by every metric - dividends, price to book, sales, free cash flow, or earnings based on GAAP (Generally Accepted Accounting Principals) or "reported" earnings, not "operating" ones, easily manipulated to exclude "write-offs." By the mid-late 1990s, companies switched to the latter method to hide over-valuations. The practice still continues to let expensive stocks masquerade as cheap ones and make the market overall look attractive to the unwary.

After the 1929 crash, newspapers reflected the mood like the Chicago Tribune headlining: "Roaring Twenties grind to a halt and a new era of hard times begins." Variety reported that "Broadway T (ook) the Slap" and New York "nite clubs, speaks & dives (echoed) market cataclysm." Its Cairo correspondent cabled that a "cinema had finally been wired in Alexandria, Egypt, Cleopatra's hometown," so the paper quipped: "Only Sodom and Gomorrah remain(ed) to be heard from."

The comment resonates today on a global scale when never have such best and brightest teams done so much for so few, so little for so many, and so greatly harmed world economies in the process - for eight years under George Bush, now continuing under Obama with no end to it in sight. The result - a likely Great Depression II that will match or surpass the worst of the first one. What Michel Chossudovsky calls "The Great Depression of the 21st Century: Collapse of the Real Economy (affecting) all sectors" globally because solutions are contributing to "further collapse," too many "experts" remain in denial, and bad policies follow failed ones.

On February 28, Warren Buffett told shareholders that 2008 was Berkshire Hathaway's worst year, and he's "certain that the economy will be in shambles throughout 2009 - and, for that matter, probably well beyond...." As for government responses so far, his comment reflected gloom: "Economic medicine previously meted out by the cupful has recently been dispensed by the barrel. These once- unthinkable dosages will almost certainly bring on unwelcome aftereffects."

Perhaps this is what he has in mind: Given current conditions and the pace of continued decline, America and world economies face a possible synchronized global collapse, yet few come out publicly and say it.

Marx did in foreseeing much of what's happening today:

-- the inevitable monopoly control of production, commerce, and finance;
-- a reserve army of exploited low-paid labor;

-- a class struggle between "haves" and "have-nots;"

-- capitalism's internal contradictions: exploiting and alienating the many for the few;

-- its crisis-prone nature: unstable, "anarchic," ungovernable, self-destructive with booms creating bubbles creating busts, then depressions; and ultimately

-- its inevitable decay and demise because a system so corrupted can't endure; a socialist revolution (he believed) will replace it based on greater freedom, inclusion, and equality.

During the depths of the Great Depression, Franklin Roosevelt delivered his March 4, 1933 inaugural address and said what applies to today:

"This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today....Values have shrunken to fantastic levels....our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side....the savings of many years of thousands of families are gone."

"More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment."

"Primarily this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers indicted in the court of public opinion, rejected by the hearts and minds of men....Faced by failure of credit they have proposed only the lending of more money (and exhortations) to follow their false leadership. They have no vision, and when there is (none) the people perish."

"The money changers have fled from their high seats in the temple of our civilization. We may now restore (it. Doing it will involve) the extent to which we apply social values more noble than mere monetary profit....there must be an end to a conduct in banking and in business which too often (results in) callous and selfish wrongdoing. (We need) action and now....to put people to work.... (by redistributing land to those) best fitted (to use it (and) by preventing the tragedy of....foreclosure of our small homes and our farms."

We need in place "safeguards against a return of the evils of the old order; there must be strict supervision of all banking and credits and investments; there must be an end to speculation with other people's money, and there must be provision for an adequate but sound currency....For the trust reposed in me, I will return the courage and the devotion that befit the time. I can do no less."

Roosevelt later saw poverty's spreading scourge, "millions of families trying to live on incomes so meager that the pall of family disaster (hung) over them day by day....one-third of the nation ill-housed, ill-clad, and ill-nourished." The same specter haunts millions today, but there's no Rooseveltian leadership to address it.

On February 21, Reuters reported that George Soros said the world financial system has effectively disintegrated, and there's no prospect of near-term crisis resolution. He called the turbulence worse than in the Great Depression and said Lehman Brothers bankruptcy was a turning point in "the collapse of the financial system. It was placed on life support, and it's still (there)."

On the same day at a Columbia University conference, Paul Volker couldn't "remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world." He cited industrial production falling faster globally than in America because of the fallout from unbridled financial markets. "It's broken down in the face of almost all expectation and prediction," and greater regulation is coming as a result.

"In the future, we are going to need a financial system which is not going to be so prone to crisis and certainly not prone to the severity of a crisis of this sort. (It will) be different from the (one) that has developed in the last 20 years." Its "primary characteristic (should be) a strong, traditional, commercial banking-type system....to service customers, individuals, businesses and governments by providing outlets for their money and by providing credit."

This should be their core business, the same as in America 30 years ago and under closer regulation. Risky "entrepreneurial activity" should be out. Big and small commercial banks must stick to their knitting and not operate like hedge funds or casinos. Mostly what's needed is stability in place of recklessly pursuing profits at the risk of a global economic collapse.

Obama Responds

Since taking office on January 20, Obama has been a caricature of a leader, a Manchurian candidate president, a front man for a criminal Wall Street - government partnership. The latest Zogby poll showed only 27% believe his stimulus will help them, and just 23% have confidence in either party.

In Obama's nationally televised February 24 address to a joint session of Congress, contrast his comments to FDR's, He:

-- downplayed the crisis;
-- vowed "We will rebuild, we will recover, we will emerge stronger than before;"
-- cited our unique greatness - "the greatest force of progress and prosperity in human history;"

-- defended trillions for bankers with "more (coming) than we've already set aside:" from a TARP II providing "commitments exceeding $2 trillion" plus another trillion or more from a so-called Public- Private Investment Fund (PPIF) offering sweetheart deal guarantees and financing to investors to buy toxic bank assets at bargain basement prices;
-- ignored the most serious unaddressed problems: decades of accumulated debt and the bad asset overhang in the hundreds of trillions that all proposed plans barely dent;

-- blamed "people" for "spend(ing) more money and pil(ing) up more debt....than ever before;"
-- ignored Wall Street's criminal excess and fraud, and
the looting of the Treasury to reward them; said nothing about a corrupted system that should be scrapped for a fair one;

-- offered nothing in the way of a New Deal approach; instead offered an anti-New Deal by promising to shrink the deficit to $533 billion, or 3% of GDP, by 2013; doing it means cutting social programs like Social Security, Medicare, and Medicaid; what FDR provided, Obama may take away;

-- defended his counterproductive policies with new ones piling more abuses on the others and increasing the debt burden instead of reducing it;

-- lied that they're "not about helping banks - (they're) about helping people;" and

-- was silent on his hidden agenda for business at the expense of working Americans and the millions criminally defrauded out of jobs, savings, homes, pensions, and futures.

In today's popular jargon, America failed its "stress test."

Yet, Obama audaciously ended by saying:

"....some day, years from now, our children can tell their children that this was the time when we performed, in the words that are carved into this very chamber, "something worthy to be remembered."

His comments followed Fed chairman Bernanke's earlier in the day's prepared semi-annual monetary policy report to Congress saying:

"If actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability....there is a reasonable prospect that the current 'recession' will end in 2009 and that 2010 will be a year of recovery."

He also said the nation's largest banks aren't "zombies" when, in fact, at least the top 20 are insolvent and need bailout help to keep operating. Earlier, he saw no market bubbles and said high home prices reflected a strong economy.

A Planned Public Response

On April 3 and 4, the Bail Out the People Movement" plans a national march on Wall Street on the anniversary of Martin Luther King's assassination. His message was:

"Rise up against wars of colonial conquest.

Fight for the right of all to a job or an income."

Nationally, more than 50 organizing centers are involved in response to the growing crisis; an absence of leadership in Washington; and an agenda of foreign wars, occupation, and rewarding criminal bankers and the rich at the expense of millions of distressed households.

"Working people must organize independently to Bail Out People, Not Banks. It's time to march on Wall Street," to denounce this injustice and act.

Visit www.BailOutPeople.org for full information on getting involved, a list of endorsing organizations, and information on organizing centers in a growing number of states, including New York, California, Illinois, Michigan, Pennsylvania, Texas, Florida, and Ohio.

In Denial Over the "D" Word

In the dominant media, inconvenient truths are suppressed, denied or delayed until they're too explosive to ignore. Even then, coverage is way short of explaining that we're in the early stages of the greatest ever economic decline. Policy makers are flying blind to contain it. They can't grasp its gravity. All measures tried have failed, and capitalism's ideological roots are at stake. For economist Richard Wolff - "Capitalism Hit the Fan," unworkable, unjust, and spreading global chaos everywhere with frightening speed.

What began as a financial crisis has now exploded with even some mainstream economists predicting a global "depression," and IMF chief Dominique Strauss-Kahn saying advanced economies are already in one.

Perhaps others will admit it after the UK Telegraph's February 26 headline: "Moody's predicts default rate will exceed peaks hit in Great Depression" when it reached 15.4%. The risks are enormous because "we are in unchartered territory....If the economy deteriorates more than expected," the rate could top 20% and be even higher in Europe - for all "non-investment grade issuers."

Merrill Lynch's David Rosenberg used the "D" word earlier in his end of January commentary titled: "Some inconvenient truths."

Not your father's recession he said, but "maybe your grandfather's....We are likely enduring a depression today," and while there are no official definitions, we've had them before - four in the 19th century and a great one in the 20th.

Recessions are generally defined as two or more consecutive GDP contracting quarters although some economists prefer measures of the relative strength or weakness of production, employment, retail sales, and so forth.

For economist John Williams, a depression is a period where inflation-adjusted peak-to-trough contraction exceeds 10%, and in a great one it's 25%.

Duration is also important. On average, recessions last about 18 months. For Rosenberg, depressions last "anywhere from three to seven years" or longer "and tend to follow years of leveraged prosperity proportions" like the period between 2002 - 2007.

Recessions are typically "inventory cycles," while depressions feature "balance sheet compression and deleveraging: debt elimination, asset liquidation, and rising savings rates." When credit expansion becomes a bubble, "the distance to the mean is longer and deeper" with upside excesses producing comparable or greater ones on the downside.

Clearly, we're way beyond a classic recession after a year and a half of massive stimulus, capital injections, "unprecedented interest rate relief," and various other measures producing no end in sight "or any signs of normalcy returning to credit."

Based on reverse-engineering the data, Williams guages unemployment at 18% when discouraged and part-time workers are included. Rosenberg says 13.5%, but either figure far exceeds the official fictitious 7.6%. Rosenberg also places idle manufacturing capacity at 30%, a level reached only once previously in the past five decades.

As for stimulus, Rosenberg sees little impact either from tax cuts or infrastructure spending. The latter "comes with a long gestation period" unlikely to be felt until "well into 2010." It also falls short of boosting long-term growth. With all proposed monetary and fiscal stimulus, the economy will still "be saddled with roughly $1 trillion of excess capacity" by year end.

So far, around $1 trillion in debt has been written off. It's not enough. We're "still in the early stages of credit contraction (and) have no idea when the credit cycle will hit bottom." Before it does, "more than $6 trillion in private sector debt must be eliminated." Time, likely years, are needed for resolution, but the Obama administration plans don't address it.

Going forward, households, especially "boomers," will stress "frugality," not "frivolity." Apres le deluge, saving for retirement is crucial as deflated assets and lost pensions won't provide it.

Here's more:

-- Federal Reserve surveys show household credit demand declining to the lowest level on record while debt is at "near-record levels relative to after-tax incomes" and so is the debt-servicing burden;

-- 10% of borrowers are in arrears or foreclosure;

-- bank delinquency rates are the highest in 15 years and rising; the earlier S & L crisis was pocket change compared to now;

-- credit card delinquencies are at an all-time high at a time the overall credit quality index "collapsed to an all-time low;"

-- this begs the question: how can banks lend when households can't and won't borrow; "bringing households to the well doesn't mean they will drink;"

-- despite much lower home prices, affordability ratios the best in over 35 years, and attractive mortgage rates, the record low National Association of Home Builders (NAHB) homebuilding index showed "residential real estate (perceptions) have changed;"

-- on February 24, the latest Conference Board consumer confidence index explained why; it plunged from 37 in January to 25 in February, its worst reading ever, and one year ago it was 76; the Economic Outlook Group's Bernard Baumohl called it a "catastrophic collapse of confidence in the economy" even after all measures the Obama administration announced;

-- it also explains "a secular (attitude) change toward consumption;" after peaking last summer, it declined at a 15% annual rate; even food is affected with consumers choosing tuna over trout and spaghetti or Spam over steak or shrimp;

-- households have been devastated by a 20% hole in their balance sheets, or a cumulative $13 trillion net worth loss as of January 1; it's the first time this happened since the 1930s; Rosenberg sees it hitting $20 trillion by year-end 2009, a level on a par with the Great Depression with no end of this in sight; this "permanent shock" is a harbinger of "sustained consumer contraction in coming years;"

-- household savings are rising but still unsustainably low (at under 3%) and will likely head toward earlier 10 - 12% levels; "there are no more rabbits to be pulled out of the hat" to encourage spending; the effect will be powerfully deflationary "for some time."

Paulson and Geithner's Violation of US Law

Specifically - Title 12, Chapter 16, Sec. 1831o of the US Code collection that Economics Professor and former Senior government regulator during the earlier troubled S & L period William K. Black discussed in his February 23 Huffington Post article titled: "Why Is Geithner Continuing Paulson's Policy of Violating the Law?"

Well before they're insolvent or when serious problems are suspected, US law "mandat(es) that the administration place troubled banks....in receivership, appoint competent managers, and restrain senior executive compensation" to prevent bonuses, huge salaries, raises, and undeserved benefits from being paid.

No provision says taxpayers should bail out bankers. Yet Paulson and now Geithner keep doing it, using vast sums kept secret - both in amounts and to whom beyond the handful of big names made public.

Geithner was at it under Bush. As New York Fed president, his responsibility was "to regulate many of the largest bank holding companies in the United States. Far too many of (them) are deeply insolvent because" they own insolvent banks. "The law mandates that" they be placed in receivership, yet as Treasury Secretary Geithner continues to violate it.

Under George Bush, congressional oversight largely stopped at the cost of today's crisis. According to some, the worst is yet to come because of criminal negligence and complicity at the highest levels of government.

"Secretaries Paulson and Geithner subverted the law by allowing failed banks to engage in massive accounting fraud (including securities fraud)."

In a follow-up February 25 article, Black explained that the FBI warned of a mortgage fraud "epidemic" in September 2004 and reported that "lenders initiated 80% of these frauds....Financial control frauds' 'weapon of choice' is accounting." It flourishes in a deregulatory climate when (as the title of Wheeler and Rothman's 1982 book suggests): "The Best Way to Rob a Bank is to Own One."

The FBI spotted it in time to stop it. Nonprime lenders were the main culprit with Wall Street deeply involved. The fraud was so extensive, it was easy to spot. Instead, banks, rating agencies, and buyers "operated on a 'don't ask; don't tell' policy." While it lasted, profits were huge, and few were the wiser. Today, "many (likely all) the big banks are deeply insolvent due to severe credit losses." They and the Treasury aren't even sure to what degree, but the amounts are staggering in size. "A 'stress test' can't remedy the banks' problem - they don't have the loan files" for documentation.

Under Bush and Obama, banks are licensed to steal. The ("quantitative") looting of the Treasury continues, and global economies sink deeper into a black hole of depression with the public as always the big loser.

The End Game to Economic Ruin?

Who can know, but look what casino capitalism brought us. In December 2006, John Bellamy Foster discussed "monopoly capital's" evolution in commemorating the 40th anniversary of Paul Baran and Paul Sweezy's classic work: "Monopoly Capital - An Essay on the American Economic and Social Order." In his new book, The Great Financial Crisis: Causes and Consequences, he discusses the legacy it left us.

Giant corporations arose early in the last century followed by wars, depression, and more wars. Post-WW II, "capitalism was fully consolidated, particularly within the United States, the most advanced capitalist economy," and for some years thereafter the only healthy major one unravaged by the war.

As a result, corporate America flourished, grew larger and more dominant. Profit-making oligopolies and monopolies resulted "competing not on price but mainly in the areas of cost-cutting and the sales effort." Out of this grew "surpluses, and the economy's problem was to absorb it to avoid stagnation."

It led to overcapacity, so key was "to find additional outlets....beyond capitalist consumption and investment" or face "economic malaise." Beginning in the late 1960s and 1970s, financialization came to the rescue, and "to some extent (shifted) control over the economy from corporate boardrooms to the financial markets. Corporations were increasingly seen as bundles of assets, the more liquid the better." A new "monopoly finance" capitalism was advanced to exploit it.

It produced new outlets for surplus in the FIRE sector (finance, insurance, and real estate), mostly for speculation, not capital goods investments in plant and equipment, transportation, and public utilities that earlier fueled business cycle expansions. It kicked off a "whole new historical period" that wasn't apparent before the late 1960s. But the implications were huge and today have backfired.

The 1980s saw "an unprecedented upsurge of debt in the economy." In the 1970s, it was about one-and-a-half times GDP. By 1985, it was double, and by 2005 it was three-and-a-times GDP, rising, and approaching "the $44 trillion (level) for the entire world." Ever since, "the way was open for a proliferation of financial instruments and markets, which (until the present) proved to be literally unlimited."

Much earlier, Keynes warned about "enterprise becom(ing) the bubble on a whirlpool of speculation" like in the 1920s, the price being the Great Depression.

Beginning in the late 1960s and 1970s, the process began repeating as "economic malaise" needed new stimulus. "Unable to find profitable outlets....within the productive economy, corporations/ capitalists sought" opportunities through financialization, speculation, casino capitalism, "while the financial system responded with a bewildering array of new financial instruments - including stock futures, options, derivatives, hedge funds, etc." As a result, a "financial superstructure...took on a life of its own" that today is consuming world economies.

Back then was different. "New Economy" notions took hold. The sky was the limit, but bubbles eventually grow and always burst. Minor by comparison, the 1997-98 Asian crisis showed how fast contagion can spread. Today it's global and out-of-control. No one's sure how to contain it, so bankers are getting trillions in a desperate attempt to socializing losses, privatize profits, and pump life back into a corpse through a sort of shell game or grandest of grand theft process of sucking wealth from the public to the top in hopes enough of it will work.

Speculation and debt need more of it to prosper, but in the end it's a losing game. The greater the expansion, the harder it falls - especially when not making things and working Americans are exploited. Since the 1970s, wages stagnated and lost purchasing power as inflation rose. So did benefits like health care and pensions. Household debt rose to compensate. Two wage-earner households as well. It let "monopoly-finance capital (produce) an accumulation of misery" now exploding since 2008's global collapse, exposing capitalism's dark side and destructive contradictions, particularly its financialization form.

Foster quoted Baran and Sweezy's response to an "irrational system." What's needed is "our moral obligation to (fight) against an evil and destructive system which maims, oppresses, and dishonors those who live under it, and which threatens devastation and death to millions....around the globe." Today, the threat is real, growing, and becoming greater than most anyone imagined, remembers, or has any sure way to contain.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at [e-mail].

Also visit his blog site at sjlendman.blogspot.com

[Swamp Gas]

FLASHBACK FROM 1999

www.nytimes.com/1999/11/05/business/congress-passes-wide-ranging-bill-easing-bank-laws.html?sec=&spon=&emc=eta1&pagewanted=1

CONGRESS PASSES WIDE-RANGING BILL EASING BANK LAWS

By STEPHEN LABATON
Published: Friday, November 5, 1999

Congress approved landmark legislation today that opens the door for a new era on Wall Street in which commercial banks, securities houses and insurers will find it easier and cheaper to enter one another's businesses.

The measure, considered by many the most important banking legislation in 66 years, was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57. The bill will now be sent to the president, who is expected to sign it, aides said. It would become one of the most significant achievements this year by the White House and the Republicans leading the 106th Congress.

''Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,'' Treasury Secretary Lawrence H. Summers said. ''This historic legislation will better enable American companies to compete in the new economy.''

The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation's financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.

Today's action followed a rich Congressional debate about the history of finance in America in this century, the causes of the banking crisis of the 1930's, the globalization of banking and the future of the nation's economy.

Administration officials and many Republicans and Democrats said the measure would save consumers billions of dollars and was necessary to keep up with trends in both domestic and international banking. Some institutions, like Citigroup, already have banking, insurance and securities arms but could have been forced to divest their insurance underwriting under existing law. Many foreign banks already enjoy the ability to enter the securities and insurance industries.

''The world changes, and we have to change with it,'' said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ''We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.''

In the House debate, Mr. Leach said, ''This is a historic day. The landscape for delivery of financial services will now surely shift.''

But consumer groups and civil rights advocates criticized the legislation for being a sop to the nation's biggest financial institutions. They say that it fails to protect the privacy interests of consumers and community lending standards for the disadvantaged and that it will create more problems than it solves.

The opponents of the measure gloomily predicted that by unshackling banks and enabling them to move more freely into new kinds of financial activities, the new law could lead to an economic crisis down the road when the marketplace is no longer growing briskly.

''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota. ''I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''

Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ''seemed determined to unlearn the lessons from our past mistakes.''

''Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,'' Mr. Wellstone said. ''Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.''

Supporters of the legislation rejected those arguments. They responded that historians and economists have concluded that the Glass-Steagall Act was not the correct response to the banking crisis because it was the failure of the Federal Reserve in carrying out monetary policy, not speculation in the stock market, that caused the collapse of 11,000 banks. If anything, the supporters said, the new law will give financial companies the ability to diversify and therefore reduce their risks. The new law, they said, will also give regulators new tools to supervise shaky institutions.

''The concerns that we will have a meltdown like 1929 are dramatically overblown,'' said Senator Bob Kerrey, Democrat of Nebraska.

Others said the legislation was essential for the future leadership of the American banking system.

''If we don't pass this bill, we could find London or Frankfurt or years down the road Shanghai becoming the financial capital of the world,'' said Senator Charles E. Schumer, Democrat of New York. ''There are many reasons for this bill, but first and foremost is to ensure that U.S. financial firms remain competitive.''

But other lawmakers criticized the provisions of the legislation aimed at discouraging community groups from pressing banks to make more loans to the disadvantaged. Representative Maxine Waters, Democrat of California, said during the House debate that the legislation was ''mean-spirited in the way it had tried to undermine the Community Reinvestment Act.'' And Representative Barney Frank, Democrat of Massachusetts, said it was ironic that while the legislation was deregulating financial services, it had begun a new system of onerous regulation on community advocates.

Many experts predict that, even though the legislation has been trailing market trends that have begun to see the cross-ownership of banks, securities firms and insurers, the new law is certain to lead to a wave of large financial mergers.

The White House has estimated the legislation could save consumers as much as $18 billion a year as new financial conglomerates gain economies of scale and cut costs.

Other experts have disputed those estimates as overly optimistic, and said that the bulk of any profits seen from the deregulation of financial services would be returned not to customers but to shareholders.

These are some of the key provisions of the legislation:

*Banks will be able to affiliate with insurance companies and securities concerns with far fewer restrictions than in the past.

*The legislation preserves the regulatory structure in Washington and gives the Federal Reserve and the Office of Comptroller of the Currency roles in regulating new financial conglomerates. The Securities and Exchange Commission will oversee securities operations at any bank, and the states will continue to regulate insurance.

*It will be more difficult for industrial companies to control a bank. The measure closes a loophole that had permitted a number of commercial enterprises to open savings associations known as unitary thrifts.

One Republican Senator, Richard C. Shelby of Alabama, voted against the legislation. He was joined by seven Democrats: Barbara Boxer of California, Richard H. Bryan of Nevada, Russell D. Feingold of Wisconsin, Tom Harkin of Iowa, Barbara A. Mikulski of Maryland, Mr. Dorgan and Mr. Wellstone.

In the House, 155 Democrats and 207 Republicans voted for the measure, while 51 Democrats, 5 Republicans and 1 independent opposed it. Fifteen members did not vote.

Tucked away in the legislation is a provision that some experts today warned could cost insurance policyholders as much as $50 billion. The provision would allow mutual insurance companies to move to other states to avoid payments they would otherwise owe policyholders as they reorganize their corporate structure. Many states, including New York and New Jersey, do not allow such relocations without the consent of the insurer's domicile state. But the legislation before Congress would pre-empt the states.

Both the Metropolitan Life Insurance Company and the Prudential Life Insurance Company are in the midst of reorganizing into stock-based corporations that are requiring them to pay billions of dollars to policyholders from years of accumulated surplus. In exchange, the policyholders give up their ownership in the mutual insurance company.

The legislation would permit any mutual insurance company to avoid making surplus payments to policyholders by simply moving to states with more permissive laws and setting up a hybrid corporate structure known as a mutual holding company.

The provision was inserted by Representative Bliley at the urging of a trade association. It attracted little opposition because it was attached to a provision that forbids insurers from discriminating against domestic-violence victims.

In a letter sent to Congress this week, Mr. Summers said that the provision ''could allow insurance companies to avoid state law protecting policyholders, enriching insiders at the expense of consumers.''

[Swamp Gas]

www.counterpunch.org/whitney03232009.html

Judgment Day for Geithner

By MIKE WHITNEY

Whether he deserves it or not, Timothy Geithner has become the poster boy for everything that's wrong with the government's scatterbrain financial rescue plan. Geithner was in the wheelhouse at the New York Fed when Bear Stearns and Lehman Bros defaulted, and he has played a central role in the $165 million AIG bonus scandal which has ignited a populist firestorm across the country. Now everything even remotely connected to the bank bailout has become a source of fist-clinching rage. The mood of the country has darkened from the steady downpour of bad economic news, the sharp decline in housing prices and the steep rise in unemployment. People are angry at the government, the banks and Wall Street. Their nerves are frayed and their patience is stretched to the limit.

It is in this atmosphere of simmering public fury that Geithner will announce the details of his long-awaited plan for removing up to $1 trillion of toxic assets from the balance sheets of some of the country's biggest banks. Information about Geithner's "Public-Private Partnership" and the so called Term Asset-Backed Securities Loan Facility (TALF) has been spotty so far, but enough is known about the plan to predict that it will likely be the noose into which Geithner thrusts his scrawny neck bringing his dismal career at Treasury to a end. The country will not endure another pretentious-sounding banker-friendly flim flam, which is precisely what Geithner has in mind.

According to the Associated Press:

"Officials said Geithner’s plan will have three major parts. One part will be an effort Geithner spoke about last month - the creation of a public-private partnership to back purchases of bad assets by private investors... Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up with government funds.

A second part of the plan will expand a recently launched program being run by the Federal Reserve called the Term Asset-Backed Securities Loan Facility, or TALF.

That program is providing loans for investors to buy assets backed by consumer debt in an effort to make it easier for consumers to get auto, student and credit card loans. Under Geithner’s proposal, this program would be expanded to support investors’ purchases of banks’ toxic assets.

The third part of the Geithner plan would utilize the resources of the FDIC, the agency that guarantees bank deposits, to purchase toxic assets. Officials said that the FDIC will create special purpose investment partnerships and then lend those partnerships money so that they can buy up troubled assets." (AP)

Why in heaven's name would Sheila Bair attach her good name to Treasury's latest bunko-scam? As Bair undoubtedly knows, the main objective of the Public-Private Partnership and TALF is to provide inflated prices for garbage assets that investors refuse to buy. It's just a way of transferring losses from the banks to the taxpayer by using a middleman who looks like a partner but only has a 5 percent stake in the game. This is Timmy's circuitous way of socking it to the public one more time. Here's how Yves Smith at Naked Capitalism explains it:

"First, the banks, as in normal auctions, will presumably set a reserve price equal to the value of the assets on their books. If the price does not meet the reserve (and the level of the reserve is not disclosed to the bidders), there is no sale; in this case, the bank would keep the toxic instruments.

Having the banks realize a price at least equal to the value they hold it at on their books is a boundary condition. If the banks sell the assets as a lower level, it will result in a loss, which is a direct hit to equity. The whole point of this exercise is to get rid of the bad paper without further impairing the banks."

Okay, so the auctions are rigged and the banks get overpaid for toxic waste. Surprised? Geithner's task from Day 1 has been to keep the money flowing from the vault at Treasury to the big banks. This is just more of the same. The TALF and the PPP are just clever acronyms meaning "corporate welfare" which is ladled out to bank tycoons who have their agents working the levers from the inside. The public, of course, takes it in the shorts once again.

Yves Smith puts it like this:

"Dear God, the Administration really thinks the public is full of idiots. But there are so many components to the program, and a lot of moving parts in each, they no doubt expect everyone's eyes to glaze over." (Public Private partnership emerging, Yves Smith, Naked Capitalism)

Geithner has been trying for weeks to lure hedge funds and private equity firms into participating in his program offering up to 95 percent leverage for the purchase of the banks bad assets. By providing loan guarantees rather than capital, Geithner can (in the words of the Wall Street Journal's David Wessel) "rely on the Federal Reserve's amazing ability to come up with unlimited sums without congressional consent." This means that Geithner has moved on to Plan B which makes good use of Bernanke's deep pockets and well-oiled printing press.

Geithner's strategy is nothing more than a trillion dollar stealth bailout of the country's biggest banks. The funding from the TALF and PPP are just the first part of a one-two knockout punch. Treasury will try to show that it paid less for the assets than their current book-value (which, of course, is grossly inflated) and then follow up with generous capital injections from the TARP program to make up the difference. That way, the banks will be "made whole" again while the public gets the double whammy. Geithner is hoping that the public relations hype surrounding the program will allow him to carry out his strategy before anyone figures out what's really going on. Fortunately, the blogosphere is following every little detail, which means that the plan will be picked apart just minutes after it is released. If the commentariat gives it the "thumbs down", there's a good chance that Geithner will have to pack it in and resign. His credibility was wobbly to begin with. A failure here would surely be the last straw. Senator Richard Shelby, voiced the concerns of many elected representatives when he said on FOX News Sunday, that Geithner was on "shaky ground" and that "If he keeps going down this road, he won’t last long.” By late Monday, we should know whether Geithner will continue to serve at Treasury or hobble back to his dingy rookery at Kissinger and Associates.

The New York Times writes:

"The Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.

... Private investors, then, would be contributing as little as 3 percent of the equity, and the government as much as 97 percent."

The idea that 97 percent "low interest" funding constitutes a "partnership", boggles the mind. Where can a businessman or a homeowner get gravy a deal like that? The Treasury is providing a subsidy to Wall Street crooksters to manage taxpayer money so they can fatten their own bottom line. It's that simple. Geithner's not only willing to empty the public purse for his buddies but, also, write another trillion dollar check on an account that is already overdrawn by $11 trillion. This is one gigantic looting operation concocted by bank lobbyists masquerading as public officials.

The whole purpose of the Geithner shakedown is to mislead the public. Why should the perilously underfunded FDIC provide a non-recourse loans to hedge fund sharpies and PE scalawags when its primary responsibility is to protect bank depositors? And why are they setting up more of the same Enron-type "off-balance sheets" special purpose vehicles which blew up the financial markets to begin with? This has disaster written all over it. The non recourse loans create a "no lose" situation for investors who can dump any type of crappy mortgage-backed sludge into the program and not worry about any legal backlash. Here's how Paul Krugman sums it up:

"The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

To this end the plan proposes to create funds in which private investors put in a small amount of their own money, and in return get large, non-recourse loans from the taxpayer, with which to buy bad — I mean misunderstood — assets. This is supposed to lead to fair prices because the funds will engage in competitive bidding....

This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work." (Paul Krugman's blog)

Geithner's plan is a catastrophe. It's just a sloppy remake of Paulson's failed Super SIV that was supposed to save Citi from massive losses but closed without a single sale. Not one investor stepped forward to buy assets even though Paulson slapped the Treasury's seal of approval on entire operation. It was a complete bust. Now Geithner is following in the ex-Treasury Secretary's footsteps.

The banks are not going to fix themselves. Only government can do that, which means that someone will have to fill the leadership void and do the heavy lifting. But time is running out and the problems are getting worse. Public support is on the wane. Obama should take advantage of what little confidence in the system is left and take radical corrective action. Insolvent financial institutions have to be taken into receivership and liquidated. Shareholders and bondholders will have to take a haircut. And Geithner, Summers and the rest of the White House banking fraternity will have to resign or be fired. Obama should mull over Albert Einstein's sage advice when he said, "The problems we face today cannot be solved by the minds that created them."

[Swamp Gas]

news.goldseek.com/EuroCapital/1241809381.php

Don't Be Fooled by Inflation

By: Peter Schiff, Euro Pacific Capital, Inc.


8 May 2009

Strike up the band, boys, happy days are here again! Recently released short-term economic data, including unemployment claims, non-farm payrolls, home sales, and business spending, which had been so unambiguously horrific in February and March, are now just garden-variety awful. With the Wicked Witch of Depression now apparently crushed under the house of Obamanomics, the Munchkins of Wall Street have sounded the all clear, pushing the Dow Jones up 25% from its lows. But the premature conclusion of their Lollipop Guild economists, that the crash of 2008/2009 is now a fading memory, is just as delusional as their failure to see it coming in the first place.

Once again, the facts do not support the euphoria. Over the past few months, the government has literally blasted the economy with trillions of new dollars conjured from the ether. The fact that this "stimulus" has blown some air back into our deflating consumer-based bubble economy, and given a boost to an oversold stock market, is hardly evidence that the problems have been solved. It is simply an illusion, and not a very good one at that. By throwing money at the problem, all the government is creating is inflation. Although this can often look like growth, it is no more capable of creating wealth than a hall of mirrors is capable of creating people.

We are currently suffering from an overdose of past stimulus. A larger dose now will only worsen the condition. The Greenspan/Bush stimulus of 2001 prevented a much needed recession and bought us seven years of artificial growth. The multi-trillion dollar tab for that episode of federally-engineered economic bullet-dodging came due in 2008. The 2001 stimulus had kicked off a debt-fueled consumption binge that resulted in economic weakness, not strength. So now, even though the recent stimulus administered a much larger dose, we will likely experience a much smaller bounce. One can only speculate as to how much time this stimulus will buy and what it will cost when the bill arrives.

My guess is that, at most, the Bernanke/Obama stimulus will buy two years before the hangover sets in. However, since this dose is so massive, the comedown will be equally horrific. My fear is that when the drug wears off, we will reach for that monetary syringe one last time. At that point, the dosage may be lethal, and the economy will die of hyperinflation.

As always, the bulls fail to understand that investors can lose wealth even as nominal stock prices rise. As a corollary, the bearish case is not discredited by rising stock prices. While there are some bears that mistakenly cling to the idea that deflation will cause the dollar to rise, those of us in the inflation camp understand that the opposite will occur.

In the meantime, stocks are not rising because the long-term fundamentals of our economy are improving. If anything, the rise in global stock prices is due to investors realizing that cash is even riskier then stocks. The massive inflation that is the source of the stimulus is essentially punishment for those holding cash. To preserve purchasing power, investors must seek alternative stores of value, such as common stock.

It is important to point out that despite an impressive rally, U.S. stocks have substantially underperformed foreign stocks. In the past two months, while the Dow Jones has risen 30%, the Hang Seng and the German DAX have risen by over 50% in U.S. dollars. Commodity prices are also rising, with oil hitting a five-month high. And gold is shining as well, with the HUI index of gold stocks up 30% during the past two months, and 2/3 of those gains occurring in the past month. If this rally really were about improving economic fundamentals, gold stocks would not be among the leaders. Further, during those two months, the U.S. dollar index fell by 7%, with commodity-sensitive currencies such as the Australian and New Zealand dollars surging 20%.

To me, the relative strength of foreign stocks and currencies indicates that perhaps the global economy is not as impaired as many have feared. It has been my view all along that after the initial shock wears off, the world will be better off - once it no longer subsidizes the American economy. The shrinking U.S. current account deficit is evidence of this trend in action. Renewed strength in foreign stocks and weakness in the dollar may indicate that not only is the world decoupling from the U.S., but benefitting as a result.

So let the Munchkins dance for now. But remember, the Witch is not dead, only temporarily stunned by an avalanche of fake money.

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar, read my newest book "The Little Book of Bull Moves in Bear Markets." Click here to order your copy now.

For a look back at how I predicted our current problems read my 2007 bestseller "Crash Proof: How to Profit from the Coming Economic Collapse." Click here to order a copy today.

More importantly, don't wait for reality to set in. Protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com. Download my free Special Report, "Peter Schiff's Five Favorite Investment Choices for the Next Five Years", at www.europac.net/report/index_fivefavorites.asp. Subscribe to my free, on-line investment newsletter, "The Global Investor", at www.europac.net/newsletter/newsletter.asp. And now watch the latest episode of my new video blog, “The Schiff Report”, at www.europac.net/videoblog.asp.

[KNOWTHIS]

Chrysler retirees apparently just lost their dental and eye care. My dad will probably lose his soon too through GM. I haven't had any kind of coverage in well over ten years. Obama now says that we must work with the health care system that we have.

[Swamp Gas]

briefingroom.thehill.com/2009/05/12/kucinich-slams-obama-healthcare-savings-unconscionable-rip-off/

Kucinich slams Obama: Healthcare savings 'unconscionable rip-off'

@ 11:00 am by Michael O'Brien

The Obama administration's plan announced yesterday to save trillions in healthcare costs is an "unconscionable rip-off of the American people," Rep. Dennis Kucinich (D-Ohio) argued Tuesday.

Kucinich slammed the administration's deal, brokered with insurers, labor, healthcare providers, and other parties to save $2 trillion over the next 10 years as another bailout for a major industry.

"This is an unconscionable rip-off of the American people. This is a bailout of the insurance industry," Kucinich, an advocate of a single-payer, government run system said Tuesday on National Public Radio.

"Just like we bailed out the banks, we're bailing out the insurance industries," he argued. "And so I emphatically disagree with the approach that the White House is taking. In the end, it's going to mean more taxpayer dollars going to the insurance industry."

Kucinich lamented that the "savings" touted by the administration are simply a diminished rate of profits for insurance corporations; he believes healthcare is a "basic right" that should be provided for free by the government.

"People should not exist for the healthcare companies, healthcare should exist for us," he said, urging the Obama administration to put a single-payer option on the table while pushing for healthcare reform.