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Web Letter

I am concerned that the political leaders of both (maybe all) political parties are leading this country to become a Third World economy, if action is not taken rapidly. Journalists must learn about economic principals and then become the saviors of this nation by publicizing, educating and preaching sound economic principals to the general public. Who else has the capability to disseminate this information? Our political leaders are talking as if they never studied or read anything about economics. It is not that complicated. It is only interlocked with understandable causes and affects of various economic actions.

I am a 70-year-old engineer still working because engineering is fun. I have always been interested in economics since Texas A&M required this course for engineers, along with business law and accounting, in the 1950s. These courses benefited me greatly in my career. I also cashed in my investments last spring and avoided the loss of assets that most folks endured.

When you go anywhere in the USA to buy anything, do you look to see where is it made? Nothing is made here anymore. When you spend $1,000 for tools, parts, etc. at Home Depot, they send maybe $600 to, probably, China to purchase these products. The US no longer makes anything that other people in other countries want to buy. The US government no longer redeems US dollars for gold (since 1972). The government does allow the Chinese to redeem these freshly printed paper dollars that they earned to purchase titles to real estate, forests, industries, breweries, hotels, factories, casinos, financial institutions and everything else of value that is located in the USA. All of the other industrial nations who participate in supplying us with products so that we do not have to work are similarly treated.

The dollar-buying power or value is partly about psychology when it is backed by the "full faith and credit of the US government" rather than gold. This is the same as my definition of "junk bonds." The US government does not go to banks to borrow money. The US government just buys a lot of paper and cranks up the presses to create more dollar bills, T-bills, government bonds, etc. and deposits these into banks to pay for the checks that they give out to pay for their pork-barrel projects, negative balance of trade, government payrolls, bailouts, entitlements, operations, social schemes, wars, new infrastructure, wealth redistribution, mental health, imported consumer goods and so on. Since the US government stopped redeeming freshly printed US dollars for gold, foreign governments and foreign individuals are allowed to redeem these dollars for everything of value in the USA. Some government sources estimate that the title to 25 percent of our property and businesses are now foreign-owned. What will be the buying power of the dollar when we have nothing left that the foreigners want for redemption of the dollars they earned by manufacturing the things that we imported and consumed? This is selling of our children's legacy to foreign owners, and the US government calls it "investing in America." This is sort of like selling our body parts to keep from working!

I really do believe that we must preserve the economic miracle that has given our US citizens one of the highest living standards in the world. This standard of living was created by the agricultural and industrial base that produced the food, goods, services and other items that we consumed, plus an excess of these goods and services that were produced and then sold to other foreign countries in order to accumulate the US gold reserves through a positive balance of trade surplus payments. Our gold reserves are the basis of the value or buying power of our currency. This was (is) true of all of the currencies in the world.

Our political and economic leaders seem to have decided that we can continue our economic miracle by becoming a service-oriented society, cooking hamburgers for one another using imported beef, imported vegetables, etc., selling insurance & junk bonds to each other, and suing each other--but definitely not manufacturing or creating anything that we consume. The only way that we can reverse this trend is to again start making the things that we consume.

The only thing that will save the US economy is reversing the trade deficit and then re-building our gold reserves in order to preserve the buying power of the dollar. The only way to do this is to produce export more (dollar value of) things than we import. The only way that we can accomplish exporting is to re-industrialize and make these products with US materials and labor. In the last few decades we have purposefully destroyed the industrial base that won WWII and gave us today's bountiful way of life. Paying people to pave roads, build infrastructure, plant trees, dig holes then refill the same holes, rake leaves, write poems, paint pictures, environmental cleanup, etc. will not be useful or contribute anything to correcting the US economic problem. Only a positive balance of trade will restore the value of the dollar, and we must accomplish this by any means possible, or accept Third World poverty on a large scale basis. Riots and insurrection are predictable, à la the French Revolution, when the people find their situations economically hopeless.

There is (probably) a limit to the amount of paper dollars that foreign manufacturers and suppliers of raw material will continue to accept in payment. This limit will become apparent as soon as foreigners own title to everything of value in the USA. The population will probably become employees, indentured servants, or maybe slaves of the foreign countries and individuals. The foreigners know that the US dollars that they earn will buy less and less each day that they do not spend them. They also know that these securities are not redeemable for anything except the "full faith and credit of the USA" (a k a junk bonds). Our children and grandchildren might also have to change to the religion of the business owner if they want a job. Future nationalization of foreign-owned assets (à la Mexico) is another discussion topic for another day.

It is not the foreign manufacturers' fault that this economic condition exists. We created it ourselves. We purposefully destroyed most of our industries and fired all the employees in the US for various reasons. Why should we work and make the things we consume when we can get people in other countries to work to make these things for our consumption? We can pay them with freshly printed paper currencies and other types of freshly printed-paper securities (junk bonds). They can redeem them by exchanging them for titles to our real estate, hotels, forests, breweries, casinos, factories, and our remaining businesses (instead of gold). Stupid legislators of both our political parties, ignorant government employees, self-serving corporate managers, greedy unions, Wall Street financial-genius criminals, Enron and Arthur Anderson-type master criminals, NAFTA, EPA, WTO, and OSHA, just to name a few, have created this situation.

How can we ever restart our industries (re-industrialize) to generate a positive balance of trade that will restore our economy? Most of the men who knew how to operate the US basic industry and factories were fired thirty years ago and are now long dead. There are no books that completely tell everything about how to do most of the things that we knew how to do years ago when we created the industries that won WWII and then gave us this bountiful way of life. We need science-oriented citizens to create new innovative products and services that we can exchange for foreign currency. Our computer programming technology and expertise has helped our balance of payments considerably in the past, but the lack of technical education in this country today has reduced and will soon totally destroy this export capability. The foreign countries have become better than the USA at creating new computer software programs.

Visit the Texas Medical Center (MD Anderson) and witness the percentage of women wearing burkas to get a clue as to the percentage of foreign medical service income received there. This improves our foreign trade balance.

We desperately need to create many scientists and engineers who are superior to foreign scientists and engineers in order to innovate and produce new products that foreigners do not have but will buy so we can export these products. We also need to export scientific and engineering services to foreign nations in return for their currency on order to improve our balance of trade, but this has to be provided by scientists and engineers who are superior to foreign scientists and engineers, or they will not buy the services of US scientists and engineers. We need to stop the H1B import of low-paid scientific and engineering talent, in order to create a financial incentive for our students to major in technical and scientific subjects that are needed to re-industrialize the USA, instead of other topics that do not benefit the economy. We need to return to scientific and technical education systems because we can only export technology if we have superior products and services to export.

I believe that there is very little economic future in the science or engineering fields and that most students today (including my children who started in mechanical engineering but changed majors to easier courses) want to study business and/or economics to become Enron-type master criminals, or emulate some of the other extremely wealthy master criminals of today. No person in his or her right mind would major in science or engineering, since the pay scale has eroded so much (due to the import of foreign engineers who will work for just slightly above minimum wages and a green card). The foreign engineers might be much less as productive as US -educated engineers, but they are willing to work for a fraction of what US-educated engineers are paid (or used to be paid), so it is twice as economically effective to employ foreign-educated engineers, except for the additional liability of their design failures.

I believe that this country desperately needs more people educated in science, medicine, mathematics and engineering if this country is ever going to re-industrialize rather than just print money and sell our future to support ourselves today without producing the things that we consume. We cannot afford to support any more artists, actors, theologians, musicians, philosophers, psychologists, historians, poets, novelists, political scientists, marketing experts, etc. According to the National Science Foundation and the National Society of Professional Engineers, only about 5 percent of the current college students in the USA are getting a degree in science, medicine, mathematics or engineering are US citizens. In Asia the majority of the college students are majoring in science or engineering. I am worried about the future of my college age children, and all of the other children in the USA.

When we can no longer buy paper and print more dollars to pay for our imported products and government activities, we will be in deep trouble with no quick way out. It is going to take decades to re-create the US industrial bases that we destroyed over the past few decades. This will first require that our students study science instead of other subjects in our colleges, in order to create the technology and other things that support re-industrialization. We must emulate China, India, Pakistan, or die economically.

Our loan program that helps students who want to become artists, poets, historians, political scientists, plus all sorts of other degrees that generally do not contribute anything to our balance of trade, should be eliminated. Student loans should be available for only those fields such as science, engineering, education, accounting and medicine that do contribute to our industrial base and help our international trade balance. Student loans should not be available for prospective historians, social engineers, artists, poets, theologians, actors, marketing, business, or any other activities that do not contribute to our industrial base or improve our balance of trade situation. Let the people that enjoy art, poetry, gambling, playing stocks, religion, and etc. pay to support those activities.

Civilized nations have always taxed the agricultural and industrial population to pay for providing national security, crime prevention, education, fire prevention and other similar items that are necessary to assist and protect their agricultural and industrial production base. Our productive industrial base could not exist with foreign invasion, rampant crime, protection rackets, corruption, sabotage, etc., so a portion of the money earned by this producing base has always been taken by taxation by all civilizations to pay for federal, state and local governments to prevent these occurrences. Maybe we can no longer afford to spend our hard earned taxes on national service, social entitlements, welfare, environmental clean-up, pork-barrel projects, free education, free medicine, subsidized housing, humanities, art, writing poems, make-work schemes, digging holes then re-filling the same hole, etc. until we re-establish our economic base.

The federal government economic bailout money is currently going to pay for golden parachutes, new jet planes and bonuses to these same highly paid incompetent executives who caused these problems. These incompetent, arrogant, stupid and selfish executives took so much money from the financial markets that they caused the systems to fail. The low-paid US citizen is paying hard-earned taxes to them to continue their bad business policies that caused this crisis? Should taxpayer money pay off the bank loans that occurred when these financial geniuses borrowed money to pay stock dividends, in order to artificially drive up the stock prices, which personally enriched themselves through their stock option plans? How can we get rid of these financial geniuses that caused these problems without costing the taxpayer any more of his/her hard-earned tax money? They are still on the job when they should be unemployed and living under a bridge.

The Enron group, with Jeff Skilling, Ken Lay, and Fastow as their leaders, swore to false financial statements, perjured themselves when testifying about facts and generally lied about everything that they filed with the SEC with very little penalty. They all need to rot in prison until they die, as a deterrent to other prospective financial geniuses. Their prison sentences should be proportionate to the amount of money stolen. I am sure that these Enron and Arthur Anderson-type master criminals are emulated by the current crop of Wall Street financial geniuses who studied their successes. We need legislation to make the CEOs become criminally responsible for any false company financial statements filed with the SEC. Many more crooked CEOs need to be in prison for long periods of time. I am a CEO of a small (international engineering) corporation.

The stock markets are just gambling venues for the public to make gambling wagers (investments) in ownership of publicly traded companies, securities, loans, and other investment vehicles. Investors just lost some of value of their investments, and there is nothing wrong with this loss, since the value was speculation over and above the balance sheet value of the companies. The investors should not have believed anything that their brokers told them about those or any other investments. If you review almost any of the SEC filings (on the EDGAR database), you will find almost all of the sworn information filed with the SEC is extremely false, most especially when you get away from the "Blue Chip" stocks.

Many people got loans for houses they could not afford, and these people should lose their houses in foreclosure. The federal government might have pressured the mortgage markets to give mortgages to people with bad credit histories. Financial managers combined multiple numbers of these low quality loans into packages (of low-quality loans) and sold them to investors at (almost) face value. These financial managers got multimillion-dollar (non-refundable) bonuses for their efforts. As more and more of these sub-prime non-credit-worthy mortgagees defaulted, the value of these packages of multiple mortgages diminished drastically. The taxpayer is now being asked to pay for these financial mistakes.

California real estate values will plummet to a fraction of their present level. The $500,000 South LA crackhouse with a $495,000 mortgage, roof leaks, no air conditioning and no plumbing owned by an unemployed person (crack cocaine supplier) might now sale for $5,000, and that might be closer to the actual retail sale value. No more "flipping houses." No more real estate financial geniuses. No more get-rich-quick real estate seminars.

Wall Street should not have gotten a bailout. A financial failure would an incentive for these and other future investors to become more cautious of what they buy in the way of mortgages. A financial failure would cause the investors to become more skeptical concerning anything that the financial experts have to say (usually lies). We need for this financial penalty to happen. A financial failure would cause investors to be wary of and question anything that any stockbroker or any other financial genius has to say. They are spending the bailout money on bonuses for themselves and new larger private jets.

There is nothing more saddening or devastating than mass unemployment such as exists in countries such as Mexico or India. I have visited India many times on business. Crime, family abandonment, divorce, the selling of 12-year-old daughters to brothels and 12-year-old sons to rug weavers, and other bad things increase during these periods of unemployment. Our basic industries such as steel, computer chips, aircraft, tires and automobile parts, appliances, textiles, petrochemical refining etc. have been decimated in and/or totally eliminated from this country by OSHA and the EPA. The North American Free Trade Agreement has almost eliminated the remainder of the basic industrial manufacturing jobs from the USA. The OSHA and the EPA are the major causes of the de-industrialization of the USA. The USA must re-industrialize. Even if OSHA and the EPA were eliminated today, it would take many years to re-create the manufacturing and industrial production bases that they destroyed. New jobs created by the EPA are nice, but they are about as economically useful to our balance of payments and our industrial base as paying people for raking leaves or digging holes and re-filling the same holes, since they do not produce anything economically useful that we can consume or export.

We must act now while we can still buy re-industrialization with the remaining purchasing power of the dollar--before we have redeemed all of the existing US assets for imported goods and the buying power of the dollar becomes nil.

We have met the enemy and it is us.

Gerald Roy Spencer

Houston, TX

Feb 17 2009 - 9:12pm

Web Letter

"Crash Landing"--what an apt description for our situation. While I was reading the article I was listening to Jaimie Galbraith on the Canadian channel CBC explaining the stupidity of the mantra "liquidity and lack of credit." We are finally getting to the point of admitting that we no longer have jobs making things. Being a greeter at Wal-Mart doesn't sustain any kind of shelter, especially if the wife loses her job making beds at Motel 6. Another metaphor that seems appropriate is the poor that were left wading in sewage in New Orleans and the media screaming that it was their fault for not getting in their private jets and flying to Europe until the hurricane passed. I was surprised, during the stimulus bill discussion at how little our loudmouth talking media idiots knew about the bill itself. Not to be outdone by the media, of course, was the grandstanding fools who suggested that they didn't have the time to read the 1,071 pages. One out of every four pages is a title page, each page is double-spaced and each page is on one side only. We are down to about 250 pages of reading. I agree many of our elected officials couldn't read 250 pages in a month, let alone understand it.

James L Pinette

Caribou, ME

Feb 15 2009 - 12:29pm

Web Letter

It is a happy coincidence that facing page 30 where Bernard Avishai's excellent review of Paul Krugman's book begins is an ad for John Bellamy Foster's and Fred Magdoff"s Monthly Review Press book The Great Financial Crisis.

In that book (consisting of a few MR articles from the current decade as well as an introduction and special chapter written after the financial crash last fall) the authors lay out their thesis that the underlying cause of the financial crisis is the long-run tendency of monopoly capitalism to stagnate. The original analaysis was developed in 1966 in the book Monopoly Capital, by Paul Baran and Paul Sweezy, and elaborated by Paul Sweezy and Harry Magdoff in many articles during the next three decades. I recommend that book to those who might want to investigate what is at the base of the tendency of "advanced" and "underdeveloped" economies in the world to be prone to financial bubbles (and the inevitable busts), which is where Krugman's book begins.

I agree with the comments already published--the Obama Administration is being ridiculously timid and thus may fall much too short of any effective response to the current crisis. Anyone interested in checking out a bolder (yet still decidedly reformist) perspective should go to the website of the Political Economy Research Institute at the University of Massachusetts to read the statement put together by a group of heterodox economists in December. We call for a full "do-over" of the financial system--including an attempt to reconfigure international financial arrangement--coupled with a much stronger program of government investment and a real effort to redirect the distribution of income towards labor and away from capital.

Michael Meeropol

Wilbraham, MA

Feb 11 2009 - 9:49am

Web Letter

The economic stimulus package as presently constituted won't work. Eight hundred and seventeen billion dollars, split 58 percent spending, 42 percent tax cuts is a blown show. We don't have unlimited do-overs. Our creditors aren't going to put up with our stupidity forever. We have this golden opportunity to rescue the middle class and end the national debt. Either we get this turned around: one trillion dollars, 80 percent spending, 20 percent tax cuts, 50 percent of the 80 percent ($400 billion) spent on converting America to an entirely green economy---or we descend to being a second-rate nation. Wake up! We're running out of options. "Politics as Usual" is destroying our nation. The oil economy has to be put down, or it will put America down. Garner the political will to save us now, or go down in history as the constituency that drove the final nail (I do mean crucifixion) into a once free and proud nation.

I have an excellent addition to the stimulus package. It will create jobs, improve communications and transparency in government and magnitudinally improve cyber-security within our infrastructure. Convert every computer in the federal system (including the misbegottenly crash-prone Congressional web servers) over to Linux, Open BSD, or another, most appropriate for the application, form of Unix. The only systems that should be immune to the first wave of this conversion should be systems we are strategically or tactically dependent upon for national security. As the bulk of these are already Linux computers or clusters, this shouldn't impact the process in any significant manner.

Larry Battis

Fairfield, CA

Feb 8 2009 - 3:45pm

Web Letter

In regards to the stimulus controversy, some in the media, earning cushy salaries, unaffected by the impending crisis, ask what's the rush? But thank God, there is a new sherrif in town, as President Obama takes his fight to the people. He understands the American people are hurting and need help now!

Not unexpectedly, the GOP cries loudly, that that is not the way for Pres. Obama to win--taking it to the airwaves (however, he tried being diplomatic and nice)! They don't want him to fight--to expose their phony objections and impediments. They don't want light, but President Obama believes in transparency, and there is no time to lose in this situation. This patient, the US economy, needs emergency care, now. Thank God, a new sheriff is in town and President Obama is fighting for you. This country has waited long enough for a blood transfusion, and the time is now!

This is not about pork, as the GOP wants you to believe--this is about the saving of our economy, our way of life. America is crumbling all around us and the GOP wants to play political games, as usual!

Republicans' new talking point regarding stimulus is that polling shows the American people are against this Stimulus! What planet do they live on? By the day, blue- and white-collar workers are losing thier jobs, homes, cars. They are resorting to bread lines, unemployment compensation and food stamps (by the way, the GOP calls this welfare). The American people are hurting and the GOP is playing political games, "let's damage the president," instead of putting its time and care on the crisis looming large for the American people. At least for once!

We must remember that when the GOP were in control they held no oversight hearings on anything, they did not increase the minimum wage, their concern was not about our crumbling bridges or dirty air, water, contaminated food or Ponzi schemes that robbed people of millions.

We will know what to do in 2010.

Julie Mack

Philadelphia, PA

Feb 6 2009 - 9:23am