Our Empire of Consumption — the American Way of Life is Not Negotiable

Bill Moyers interviews US Army Colonel Andrew J. Bacevich, who identifies three major problems facing our democracy: the crises of economy, government and militarism, and calls for a redefinition of the American way of life. Excerpts below.

Link: Bill Moyers interviews US Army Colonel Andrew J. Bacevich.

BILL MOYERS: You call us an "empire of consumption."

ANDREW BACEVICH: I didn’t create that phrase. It’s a phrase drawn from a book by a wonderful historian at Harvard University, Charles Maier, and the point he makes in his very important book is that, if we think of the United States at the apex of American power, which I would say would be the immediate post World War Two period, through the Eisenhower years, into the Kennedy years. We made what the world wanted. They wanted our cars. We exported our television sets, our refrigerators – we were the world’s manufacturing base. He called it an "empire of production."

BILL MOYERS: Right.

ANDREW BACEVICH: Sometime around the 1960s there was a tipping point, when the "empire of production" began to become the "empire of consumption." When the cars started to be produced elsewhere, and the television sets, and the socks, and everything else. And what we ended up with was the American people becoming consumers rather than producers.

BILL MOYERS: And you say this has produced a condition of profound dependency, to the extent, and I’m quoting you, "Americans are no longer masters of their own fate."

ANDREW BACEVICH: Well, they’re not. I mean, the current debt to the Chinese government grows day by day. Why? Well, because of the negative trade balance. Our negative trade balance with the world is something in the order of $800 billion per year. That’s $800 billion of stuff that we buy, so that we can consume, that is $800 billion greater than the amount of stuff that we sell to them. That’s a big number. I mean, it’s a big number even relative to the size of our economy.

BILL MOYERS: And you use this metaphor that is intriguing. American policy makers, quote, "have been engaged in a de facto Ponzi scheme, intended to extend indefinitely, the American line of credit." What’s going on that resembles a Ponzi scheme?

ANDREW BACEVICH: This continuing tendency to borrow and to assume that the bills are never going to come due. I testified before a House committee six weeks ago now, on the future of U.S grand strategy. I was struck by the questions coming from members that showed an awareness, a sensitivity, and a deep concern, about some of the issues that I tried to raise in the book.

"How are we gonna pay the bills? How are we gonna pay for the commitment of entitlements that is going to increase year by year for the next couple of decades, especially as baby boomers retire?" Nobody has answers to those questions. So, I was pleased that these members of Congress understood the problem. I was absolutely taken aback when they said, "Professor, what can we do about this?" And their candid admission that they didn’t have any answers, that they were perplexed, that this problem of learning to live within our means seemed to have no politically plausible solution.

BILL MOYERS: You say in here that the tipping point between wanting more than we were willing to pay for began in the Johnson Administration. "We can fix the tipping point with precision," you write. "It occurred between 1965, when President Lyndon Baines Johnson ordered U.S. combat troops to South Vietnam, and 1973, when President Richard Nixon finally ended direct U.S. involvement in that war." Why do you see that period so crucial?

ANDREW BACEVICH: When President Johnson became President, our trade balance was in the black. By the time we get to the Nixon era, it’s in the red. And it stays in the red down to the present. Matter of fact, the trade imbalance becomes essentially larger year by year.

So, I think that it is the ’60s, generally, the Vietnam period, slightly more specifically, was the moment when we began to lose control of our economic fate. And most disturbingly, we’re still really in denial. We still haven’t recognized that.

BILL MOYERS: Now you go on to say that there was another fateful period between July 1979 and March of 1983. You describe it, in fact, as a pivot of contemporary American history. That includes Jimmy Carter and Ronald Reagan, right?

ANDREW BACEVICH: Well, I would be one of the first to confess that – I think that we have misunderstood and underestimated President Carter. He was the one President of our time who recognized, I think, the challenges awaiting us if we refused to get our house in order.

BILL MOYERS: You’re the only author I have read, since I read Jimmy Carter, who gives so much time to the President’s speech on July 15th, 1979. Why does that speech speak to you so strongly?

ANDREW BACEVICH: Well, this is the so-called Malaise Speech, even though he never used the word "malaise" in the text to the address. It’s a very powerful speech, I think, because President Carter says in that speech, oil, our dependence on oil, poses a looming threat to the country. If we act now, we may be able to fix this problem. If we don’t act now, we’re headed down a path in which not only will we become increasingly dependent upon foreign oil, but we will have opted for a false model of freedom. A freedom of materialism, a freedom of self-indulgence, a freedom of collective recklessness. And what the President was saying at the time was, we need to think about what we mean by freedom. We need to choose a definition of freedom which is anchored in truth, and the way to manifest that choice, is by addressing our energy problem.

He had a profound understanding of the dilemma facing the country in the post Vietnam period. And of course, he was completely hooted, derided, disregarded.

BILL MOYERS: And he lost the election. You in fact say-

ANDREW BACEVICH: Exactly.

BILL MOYERS: -this speech killed any chance he had of winning reelection. Why? Because the American people didn’t want to settle for less?

ANDREW BACEVICH: They absolutely did not. And indeed, the election of 1980 was the great expression of that, because in 1980, we have a candidate, perhaps the most skillful politician of our time, Ronald Reagan, who says that, "Doom-sayers, gloom-sayers, don’t listen to them. The country’s best days are ahead of us."

BILL MOYERS: Morning in America.

ANDREW BACEVICH: It’s Morning in America. And you don’t have to sacrifice, you can have more, all we need to do is get government out of the way, and drill more holes for oil, because the President led us to believe the supply of oil was infinite.

BILL MOYERS: You describe Ronald Reagan as the "modern prophet of profligacy. The politician who gave moral sanction to the empire of consumption."

ANDREW BACEVICH: Well, to understand the truth about President Reagan, is to understand why so much of what we imagined to be our politics is misleading and false. He was the guy who came in and said we need to shrink the size of government. Government didn’t shrink during the Reagan era, it grew.

He came in and he said we need to reduce the level of federal spending. He didn’t reduce it, it went through the roof, and the budget deficits for his time were the greatest they had been since World War Two.

BILL MOYERS: And do you remember that it was his successor, his Vice President, the first President Bush who said in 1992, the American way of life is not negotiable.

ANDREW BACEVICH: And all presidents, again, this is not a Republican thing, or a Democratic thing, all presidents, all administrations are committed to that proposition. Now, I would say, that probably, 90 percent of the American people today would concur. The American way of life is not up for negotiation.

What I would invite them to consider is that, if you want to preserve that which you value most in the American way of life, and of course you need to ask yourself, what is it you value most. That if you want to preserve that which you value most in the American way of life, then we need to change the American way of life. We need to modify that which may be peripheral, in order to preserve that which is at the center of what we value.

via Barry Ritholtz

A Gasoline Shortage: We need Plug-In Electric Vehicles Now!

On Saturday at midday I saw two waiting lines of 30 – 40 cars at a local Exxon station. The BP station across the street was out of gas.

On Sunday night at 9:30pm I drove to the local corner gas stations to see if I could fill up my vehicle. The BP station pumps had no activity, but the Exxon station across the street seemed to be active, with short waiting lines. I got in a short line and called my wife to come down and get some gas — the wait didn’t seem too bad.

Then I noticed that the cars sitting at the pumps didn’t seem to be moving. In fact, the drivers were hanging around the station, sitting on the curb and chatting. The driver of the car in front of me got out and went to talk to some of the people standing around. When she returned, I asked her what is going on.

She said that the station was out of gas but everyone was waiting for the tanker truck that was supposed to be there at 8pm. I called Ann and told her not to drive to the gas station — I drove home.

We called the Exxon station at 11pm — still no gasoline.

I wonder if anyone waiting in line to buy high-priced gasoline would be interested in replacing their conventional vehicle with plug-in electric vehicle. (Many gas stations are only allowing customers to buy $20 of gasoline.)

Can this be preparation for the future?

Here are some related links:

Georgia Gas Shortage Could Last for Weeks
MyFox Atlanta, GA – 2 hours ago
ATLANTA (MyFOX ATLANTA) – Long lines, empty pumps and high frustrations and it could be a while before the problems at Metro Atlanta gas pumps get any
Washington Post Attempts To Downplay The Gas Shortage In Atlanta OpEdNews
Atlanta drivers facing long gas lines United Press International
Perdue says gas panic is ‘self-induced’ Atlanta Journal Constitution

P.S. 9/29/2008: At 10:15am I waited in line for 20 minutes. When I finally got to the pump, my credit card was approved. When I put the nozzle in, no gas came out. I looked at the pump display and it said ‘Sale Cancelled."  Then an employee of the gas station came out and yelled "Out of Gas."

Leadership in the U.S.

Thomas L. Friedman at the NYTimes.com offers some suggestions for McCain and Obama. Excerpts below.

Link: Op-Ed Columnist – No Laughing Matter – Op-Ed – NYTimes.com. Thomas L. Friedman

We have been living on borrowed time and borrowed dimes. President Bush has nothing to offer anymore. So that leaves us with Barack Obama and John McCain. Neither has wowed me with his reaction to the market turmoil. In fairness, though, neither man has any levers of power to pull. But what could they say that would give you confidence that they could lead us out of this rut? My test is simple: Which guy can tell people what they don’t want to hear — especially his own base.

Think how much better off McCain would be today had he nominated Michael Bloomberg as his vice president rather than Sarah Palin. McCain could have said, “I’m not an expert on markets, but I’ve got one of the best on my team.” Instead of a V.P. to re-energize America, McCain went for a V.P. to re-energize the Republican base.

So what would get my attention from McCain? If he said the following: “My fellow Americans, I’ve decided for now not to continue the Bush tax cuts, because the most important thing for our country today is to get the government’s balance sheet in order. We can’t go on cutting taxes and not cutting spending. For too long my party has indulged that nonsense. Second, I intend to have most U.S. troops out of Iraq in 24 months. We have done all we can to midwife democracy there. Iraqis need to take it from here. We need every dollar now for nation-building in America. We will do everything we can to wind down our presence and facilitate the Iraqi elections, but we’re not going to baby-sit Iraqi politicians who don’t have the will or the courage to reconcile their differences — unless they want to pay us for that. In America, baby sitters get paid.”

What would impress me from Obama? How about this: “The Big Three automakers and the United Auto Workers union want a Washington bailout. The only way they will get a dime out of my administration is if the automakers and unions come up with a joint plan to retool their fleets to get an average of 40 miles per gallon by 2015 — instead of the 35 m.p.g. by 2020 that they’ve reluctantly accepted. I am not going to bail out Detroit with taxpayer money, but I will invest in Detroit’s transformation with taxpayer money, provided the management and unions agree to radical change. At the same time, while I will go along with the bailout of the banking system, it will only be on the condition that the institutions that got us into this mess accept sweeping reforms — in terms of transparency and limits on the leverage they can amass — so we don’t go through something like this again. To help me figure this out, I’m going to keep Treasury Secretary Hank Paulson on the job for a while. I am impressed with his handling of this crisis.”

Who Caused the Financial Crisis?

In a Washington Post article, Eric D. Hovde describes how the greed of Wall Street and their political action committee contributions to elected officials in Washington created the financial crisis.

Link: Calling Out the Culprits Who Caused the Crisis – washingtonpost.com.

…because of the actions of the investment banks, the mortgage industry and the rating agencies, the investment community has now incurred an estimated $1 trillion and more in losses. Even more troubling, housing prices have dropped 20 percent from their July 2006 highs, with the very real likelihood that housing could contract another 15 to 20 percent — essentially wiping out more than $4 trillion in housing values. This would be the biggest hit since the Depression to Americans’ most important asset.

What is even more remarkable is that at the same time, firms such as Goldman Sachs and Lehman not only made billions of dollars packaging and selling these toxic loans, they also wagered with their own capital that the values of these investments would decline, further raising their profits. If any other industries engaged in such knowingly unscrupulous activities, there would be an immediate federal investigation.

Why is Washington so complicit in this intricate and lucrative affair? First, the Fed laid the groundwork for both these asset bubbles by lowering interest rates to historic lows. In an attempt to protect his legacy after the Internet-bubble collapse, Greenspan provided unprecedented stimulus to re-inflate the economy and maintain his popularity with Wall Street. (Remember the "Greenspan put"?) But in doing so, he spawned the largest debt and asset bubble in U.S. history.

At the same time, federal regulatory agencies such as the SEC stood idly by as Wall Street took advantage of the investment public during both the Internet and the housing bubbles. The SEC took almost no action against Wall Street after the dot-com implosion. And in the midst of the housing bubble, in 2006, only the Office of the Comptroller of the Currency pushed for any level of regulation to address subprime lending.

One has to wonder why Treasury secretaries under Presidents Clinton and Bush — Robert Rubin and Hank Paulson, respectively — took no action to curb these abuses. It certainly was not because they did not understand Wall Street’s practices — both are former chief executives of Goldman Sachs. And why has Congress been so silent? The Wall Street investment banking firms, their executives, their families and their political action committees contribute more to U.S. Senate and House campaigns than any other industry in America. By sprinkling some of its massive gains into the pockets of our elected officials, Wall Street bought itself protection from any tough government enforcement.

This is no doubt the same reason why so many members of Congress were consistently blocking attempts to reform and downsize Fannie Mae and Freddie Mac, which are essentially giant, undercapitalized hedge funds. These two entities have been huge money machines for Democrats in both the House and the Senate, many of whom recently had the gall to ask why these companies hadn’t been reformed in the past. Nor should several Republican congressmen and Senators who likewise contributed to watering down legislation aimed at reforming these institutions be let off the hook.

Wall Street’s actions are now profoundly hurting American families, communities and the entire U.S. financial system. People are being thrown out of their homes. Once seemingly indestructible financial entities are succumbing to the crisis they have created and have jeopardized the stability of the global financial system. Isn’t it ironic that the same firms that preached free-market capitalism are now the ones begging for a taxpayer bailout? Many investment professionals operating in my world believe, as do I, that we are facing the greatest financial crisis since 1929.

Fortunately, today we have safety nets, such as federal deposit insurance, that were non-existent during the Great Depression. Yet there has not been a time since the 1920s when Wall Street has enjoyed as much influence over Washington as it has for the last 12 years. Let’s hope that this influence fades rapidly — and that this financial crisis doesn’t end the same way as the one of nearly 80 years ago.

via Chris Kliemt

Let Us Stop Talking Falsely Now, The Hour is Getting Late

The title above is from the lyrics of the song All Along the Watchtower, written by Bob Dylan, re-arranged and played by Jimi Hendrix.

Jimi Hendrix died on September 18, 1970, 38 years ago today.

Close your eyes after you click on the video below, it’s all audio.

You’ll hear some of the best guitar music ever recorded.

Dave Mason played acoustic rhythm guitar.

It was recorded in 1968 on the album Electric Ladyland (album cover shown below).

Hendrix produced Electric Ladyland with headphones. Check it out with your earbuds.

Electric Ladyland album cover

Nature in the Backyard: Cat Meets Black Rat Snake

Missy the Siamese/Himalayan cat on a leash

I was walking our alpha female cat Missy on a leash when she spotted something strange in the pinestraw bordering our back yard.

I realize that many people would wonder why I would walk a cat on a leash. Missy had never, in her three years of life, been outside until I started walking her, in late August 2008 (3 weeks ago). Our three cats have always been indoor cats, for a good reason. Our cats don’t go out due to the pack of coyotes that patrol our neighborhood; these coyotes have reduced the outside cat population greatly in the last few years.

Scooter, our Siamese cat who died in 2005 at age 23, apparently knew how to deal with coyotes because he went out daily until he was forced into retirement for fighting. But Scooter was street smart and woods wise.

We don’t want our three cats to learn about coyotes the hard way, so we’ve kept them inside. But Missy has been so restless this summer that we decided to give her some new adventures, hoping that she might quit misbehaving (peeing in sinks, knocking the other cats around, etc).

On September 6 Missy and I were strolling on the edge of the back yard when she spotted the black rat snake. Missy didn’t look at it very long because she didn’t know what it was, and it wasn’t moving. I decided to start her education on large snakes. So I picked her up, tucked her under my arm, and walked over to the snake for a close inspection.

Black Rat Snake

Before I go any further, let me offer some advice. Don’t do this!!! The six-foot snake stayed still for about 20 seconds. Then, it decided to move on. Missy’s eyes bugged out and then she freaked.

If you’ve never had a cat that you are holding freak out, you are fortunate or smarter than I was.

Our cats have claws — when they are frightened, they use their claws to accelerate away from the cause of the fright as quickly as possible. Since she was under my arm, I was the launching pad for Missy’s sprint to safety, and her claws used my arm and hand, instead of the ground, to push off.

Needless to say, my right hand was scratched badly. Missy ran to the end of the leash and climbed about three feet into the air when the leash halted her sprint. She was running back to our house. I ran after her to try to get her under control. She hit the end of the leash several times before I was able to catch up to her. I grabbed her behind her shoulders with both hands, held her out at arms length to avoid the windmilling legs with claws out, and got her back in the house.

I returned with the camera to take photos of the snake. I’m assuming its the same black rat snake that has been around our home since 2005 – how do you tell one six-foot black rat snake from another? Since snakes that large are relatively rare in neighborhoods, I think it’s the same snake.

I met this snake for the first time in 2005, soon after Scooter died. It was having lunch at the expense of a nest of cardinals in a rose bush behind our house. You can see photos at this link: large black rat snake visits.

In April of 2007, it visited again. A week later, I discovered where it lives: snake condo.

This snake started hanging around our home soon after Scooter, our beloved Siamese cat, was no longer around to claim our yard as his territory. I hope it stays around because it is safe here.

An intriguing question: Does Missy’s reaction mean that cats have an innate fear of snakes? (Do people?) Please leave your opinion as a comment.