The Middle Class And The Poor Are Lousy At Class Warfare

This was first published in June 2013, but it is still relevant in too many ways, especially with Republicans now totally in charge. 

Back when George W. Bush was still president, renowned businessman Warren Buffett commented that there had been class warfare waged in America for a couple of decades, and that his class, the very rich, had been the class waging that war and that indeed his class was winning. Since Buffett's remarks, we've seen an economic meltdown largely triggered and made so horrendous by housing and mortgage manipulation by, ah well, Buffett's class, none of whom spent a day in jail, let alone in prison, as they claimed they hadn't known about all of the mortgages issued to people who hadn't yet been carted off to the coroner's office.* Even then, when forced to give up part of multimillion dollar bonuses, some of the perpetrators kicked, shouted and screamed how unfair all of this was, some seeming to show ingratitude to the taxpayers who helped bail out their banks as well as their own sorry asses. This opened a new front in class warfare, as the guilty were let off, but the poor were blamed for the plunging economy and skyrocketing unemployment, and since then the war on the poor has escalated. Since the economy hit bottom in 2009, it has made a slow, but fairly steady recovery, but with almost all income gains going to ah, Buffett's class. Meanwhile, cuts are being made, or proposed, to food programs in many states and have been proposed nationally. The Republicans, who have made no secret that they favor ah, Buffett's class, lost the presidential election in 2012, but such cuts may come under a Democratic president.**  

So let me set this out there for you: since Reagan and the conservative philosophy came to prevail, taxes were cut, especially for the rich (which we were told would not create budget deficits). Jobs were first sent to what were generally non union, generally lower wage states, putting pressure on wages for middle class people and the working poor. Then trade deals were promoted with countries where workers make a fraction of what American workers make, with whole plants eventually being transferred to some of these countries by those great patriots of ah, Buffett's class. With wages stagnant or falling for many Americans, conservatives appealed to those people's desire to maintain life style by offering tax cuts (to also help pay their growing credit bills often brought about by the attempt to bridge incomes with credit buying), which then brought serious budget deficits, which brought calls for cuts to programs for poor people to help balance the budget, the number of whom has been growing because of all of the above. The vicious cycle continues, although recently more revenues will be added from ah, Buffett's class. As Warren Buffett told politicians to "quit coddling the rich." You think maybe we should listen?   

* When defaults on mortgages grew, housing prices began to plummet, and the effects of job transfers overseas and the downward pressure on wages for the non wealthy had people who had paid their mortgages for years swept up in the resulting carnage.  

** All of this traces back to the 2010 election. For more on why, see: http://pontificating-randy.blogspot.com/2013/05/why-2010-was-such-important-election.html
  
WORD HISTORY:
Rare-This is the word meaning "uncommon, scare," as the word with the same spelling, but meaning, "not fully cooked," is a different word. "Rare" goes back to Indo European "re," which had the notion of "loose, divide;" thus, "solitary, thin, scarce." This gave its Latin offspring "rarus," with much the same "solitary, thin, scarce" meanings. Old French, a Latin based language, inherited the word as "rere," meaning "uncommon, sparse." English borrowed the word from French in the 1400s.

Misleading Rhetoric On Bailouts

We hear lots of talk about the bailouts by both political parties.* The political right runs misleading ads about "failed policies" to discredit the loans given to the financial and auto segments of the economy under both George W. Bush, a name long since forgotten by the right wing of the country (they hope voters will forget that name too), and by Barack Obama, whom the right wing has blamed for everything, except perhaps the bombing of Pearl Harbor, although don't rule that out, since his birth certificate is from Hawaii, thus establishing a link to the American naval base bombed in December 1941, long before Obama was born, but such "details" never seem to stop the right wing attack machine.**

Deciphering all of this information can be tricky, but here is the best I can come up with. In 2008, Congress authorized and President Bush signed a law providing $700 billion (with a "b") in funds to help stabilize the financial industry; namely banks, and more precisely, many big banks which had gotten themselves into trouble by bundling risky mortgages together and using them to back securities. Now, the entire $700 billion was NEVER dispersed (about $600 billion was dispersed); something I believe is generally unknown to most Americans, since the political ads are run to scare the hell out of you, or get (or keep) you angry, not to truly inform you. Most of the dispersed money was allocated on some sort of "loan" basis; that is, it is expected to be paid back, and to earn interest or other compensation, while a much smaller amount (seemingly $5-6 billion, but certainly less then $10 billion) was more or less given as grants to certain entities; the plain English translation of which means, "It's gone!"  Now, a fairly large chunk (about 55%) of the dispersed money has been PAID BACK, again, something NEVER mentioned in ads. Further, Uncle Sam has earned something on the order of $85 billion in compensation for the loans, primarily interest or dividends.*** The largest unpaid amounts from the general "financial" sector are owed by Freddie Mac and Fannie Mae (both part of the mortgage industry) and by insurance company AIG, which had lots of investments in bad securities. The auto industry bailout dispersed slightly under $80 billion, of which something like $29 billion is still owed, from what I can tell. Please understand, these numbers can change quickly, as Uncle Sam can sell stock or receive payments or dividends at any time.

In researching this information, it is sometimes difficult to tell what is really still owed, or perhaps more specifically what is expected to be paid back, according to each specific case, since Uncle Sam receives interest and dividends (as I already mentioned) and received stock or other securities in many companies, some of which were then sold by Uncle Sam, thus bringing in more money, and "apparently" reducing the amounts owed, at least in "some" cases. What do I mean? Well "Randy Inc." borrows $100,000 from you and owes you $10,000 in interest, and you get 1000 shares of the company, just to keep the numbers fairly easy. I pay you $2000 in interest payments and you get $1000 in dividends from the stock. Now, does "Randy Inc." still owe you $100,000, or $97,000? I didn't research each "deal," as the sheer magnitude of such research would be prohibitive. Further, let's say "Randy Inc." is doing better since your cash infusion, the stock rises and you sell 500 shares, earning say, $10,000. Does that "$10,000" cover part of the loan, or not? Likely it would. What the end result will be is still to be seen, but the absolute hysteria by the political right about the bailouts, especially AFTER Obama took office, that he was trying to take over the country, was absolute NONSENSE! 

* Democrats, especially, tout the money used to help both General Motors and Chrysler survive, although in their case, they either conveniently forget the Bush administration's initial involvement, or mention it quickly, as if to kill the pain. With the bank bailouts, Democrats are much quicker to mention Bush as the main advocate (which is true), as the bank bailouts have proven to be a much hotter potato, fairly or unfairly. When will either party, when appropriate, get back to sharing credit for successes, and taking joint blame for failures? The answer lies with us, for as long as so many Americans get their "news" from politically slanted cable shows, masquerading, or at least perceived by many Americans, as news programs, and from thirty second ads presenting purely one side or the other's case on a given issue, I don't see this ending. So bluntly, I DON'T see this ending. If you think such ads don't work, remember, companies wouldn't spend millions on telling you to buy their dish detergent or to buy their green beans, if their ads didn't work. We all sort of think we're too smart to be influenced by such ads, but we're being naive.

** The onerous "Citizens United" decision by the Supreme Court allows groups or individuals to spend as much as they want on political ads, without having to disclose who the donors to these ads are.

*** As best I can tell, that amount also includes the sale of some stock received by Uncle Sam in certain companies. The actual overall amount may be closer to $90 billion, but I put it at $85 billion, a figure I feel is more certain.  

WORD HISTORY:
Pay-This word goes back to Indo European "pak/pag," which had the notion of "to fasten, to unite, to make stable." This gave its Latin offspring "pax," which meant "peace," from the idea of " 'uniting' involved parties in an agreement or 'pact.' ^ " This then produced Latin "pacere," a verb meaning "to pacify," and from that idea it then developed the further meaning "to settle or satisfy (often a debt)," and the original "peace" idea was still evident, as in "keep peace with a person to whom one owes something." Old French, a Latin based language, inherited a form of the word as "paier," and English borrowed the word in about 1300 as "payen," before the modern version, and the further idea of  "something owed for work" also developed, as well as the noun form (from the verb) for such a payment; thus your "pay."

^ "Pact" comes from the same source, with the idea of "unifying sides in an agreement." 

A Diversionary Crisis, Part One

How soon we forget. Sometimes it's a good thing to take a look back at events of the not too distant past so we jar our memories, and then hopefully our common sense, back into place.

In March 2008, large investment bank "Bear-Stearns" teetered on the brink of insolvency, largely as a result of the then developing mortgage and foreclosure crisis. Bear-Stearns could not get loans from other banks, as confidence in the old bank (the bank dated from the early 1920s) went out the window, and financial markets were shaky over the whole situation. The Federal Reserve (aka, "the Fed") stepped in and through a complex deal, including bailout money, orchestrated a deal whereby Bear-Stearns was acquired by J.P. Morgan Chase.* Fed Chairman Ben Bernanke said the Fed's decision to intervene was made in order to prevent a spill over into the rest of the economy if Bear-Stearns went down. The "free marketers" nearly had a collective stroke, as this whole process went against their vaunted principles of "free market capitalism;" known to some of us as "dog-eat-dog capitalism." I also explain the concept as, "We can do ANYTHING to the public, and we mean ANYTHING, and they can't do a damn thing to us. We don't a give a good damn about people, only about money!" I actually think the public should return the "favor," and not a give a good damn about these miserable, insatiable merchants of greed.**

The Fed intervention didn't come close to righting the miserable shape of the American financial system, but it calmed things briefly. A few months later, it became more and more evident the American banking system, and, therefore, the entire American economy (and the world's, for that matter), was on the ropes, and that the predicament with Bear-Stearns had not been an isolated incident. We waited for the other shoe to fall. Lehman Brothers, another large investment bank dating to the mid 1800s (yes, 1800s!), was next to suffer the consequences of irresponsible capitalism. After serious declines in its stock price and announced layoffs of personnel, clients abandoned the bank in droves, withdrawing their money and assets almost instantly. The bank announced it would file for bankruptcy, and the DOW dropped 500 points in one day, with further staggering losses to follow. The Fed did not intervene, thus giving the "free marketers" their wish. With Lehman's collapse, the situation became so serious, the Bush administration, that bulwark of "free market capitalism," having oft essentially said to American economic problems, "we can't do anything about anything, because its a free market economy," announced, along with the support of the Fed, that they needed a special fund of $700 billion (with a "b") to shore up the financial system or that the country faced a new DEPRESSION, perhaps worse than the one dubbed "the Great Depression." With that name taken, what the hell would we call it?

Folks, having principles is one thing, but carrying principles to an extreme is lunacy. Driving off a cliff doesn't make you pure, it makes you NUTS, and then DEAD!

Part Two to follow, about debt.

* The actual deal is not the subject of this article, but for those interested, there has been plenty written about the subject, and you should have no trouble finding the details of the acquisition.

** The basic argument by the "free marketers" is, capitalists take risks hoping to make a profit on something. If that risk blows up on them, they should suffer the consequences, and government should do nothing to help them out. I would dare say, most of us probably agree with that whole concept "on paper." The problem is, these banks had become so big (remember "too big to fail?"), the failure of any one of them posed a threat to the entire economy and people's livelihoods. Further, suspicions were then rising that Bear-Stearns was not the only big bank in serious trouble.

WORD HISTORY:
Market-This word "may" trace back to Etruscan, a language primarily once spoken in central and northern Italy. Etruscan is not Indo European, or at least, linguists have not thus far connected it to Indo European. The modern Italian region of "Tuscany" is named after the Etruscans. Latin, an Indo European language related to English further down the family tree, obviously came into much contact with Etruscan in Italy, where "some" believe Latin picked up what would be the ancestor of "market," but not all agree with that hypothesis, and these people just feel the origin of the word is unknown. Whatever the case, Latin had "merx," which meant, "things for sale, wares." This spawned Latin "mercatus," which meant "trade, sale of wares; thus, "market." Now we enter another uncertain area, as some believe English acquired "market" from Old French "marchiet," which was "market" in northern French dialect. Old French had inherited, so to speak, the basic form of the word from Latin, as French is a Latin-based language. Another point of view is that English and other Germanic languages acquired the word directly from Latin, as the result of trade with the Romans, or rather their descendants in northern Italy, as apparently the word only shows up in Germanic AFTER the Roman Empire. To be quite honest, it could have come into the Germanic languages via both sources, with some acquiring it from Old French (I lean toward this for English) and others from the Latin dialects of northern Italy. The word shows up in English during the 1100s with the meaning, "a time and place set for buying and selling," with the word continuing when actual buildings were later erected for the sale of goods. The verb form came from the noun during the 1200s. German and Dutch have "Markt, although the Dutch word is spelled with a small case "m." Swedish has "marknad;" Icelandic has "markathi;" Danish and Norwegian have "marked;" Frisian has "merk."

The New Deal Era & Now, Part One

With America mired in arguably the worst economic downturn since the Great Depression, there have been lots of discussions about what we should do (or have done) about it. There are those who have said that there should have been no bailouts of any kind; that if you can't survive, oh well. Then there are those who have pretty much advocated federal bailout of just about anything; although I think their numbers are relatively small. During and after the Great Depression, strong emotions were stirred about Roosevelt's New Deal, and with the crisis now upon us, these arguments have been renewed. There are those who have said that both Hoover and Roosevelt intervened in the economy, and that, left alone, things would have corrected themselves. Some, not all, of these folks have even argued that it was government intervention that made things worse. On the other hand, others have argued that certainly Hoover did not do enough, but that even Roosevelt's policies were lacking in sufficient "punch" to reinvigorate the distressed economy.

First, let's recap just what's been going on. "Officially," the recession began in December 2007:

In early 2008, with the many people fearful of what was then a slowing economy, President Bush proposed a program of "rebates" to Americans, and that program began in late spring and early summer of last year. Now, maybe my memory fails me on this, but while I'm sure there were some protests about the program, I don't recall any "tea parties" or calls for the rebates to be paid for by cutting other government expenses (there may have been, but they certainly weren't very loud). Nor do I recall hearing that the President was a "socialist," or that he had a secret plan to make the United States a "socialist nation!" (I do have a bright red shirt, just in case I ever need to blend in.) This was at a time when the federal deficit, having grown by trillions during the previous seven years, was growing even more. The vote for the rebates was:

House of Representatives-385 FOR and 35 AGAINST (25 Republicans-10 Democrats)

Senate-81 FOR and 16 AGAINST (all 16 being Republicans) (Source for vote totals in both houses from GOVTRACK.US)

Then we had many banks teetering on the brink of collapse, several of which were declared by the administration and the Federal Reserve to be "too big to fail." I'm not going to go into each step that took place, but suffice it to say that I guess the "powers that be" decided that "Lehman Brothers," a large investment bank, was NOT too big to fail, and down it went. With this one bank failure, the whole system shook, and I'm sure all of you remember the plunges in the stock markets at various times during 2008, both in America and internationally.*** Remember, this was just ONE bank failure. Essentially up to this point, we had been told by the Federal Reserve, and to a lesser extent, Treasury Secretary Henry Paulson, that inflation was the potential problem for the United States. Suddenly, one morning I put on the television and there were reports that Fed Chairman Ben Bernanke and Secretary Paulson had called President Bush and top congressional people from both parties to a meeting, where they were told that 700-750 billion dollars (that's billion, with a "B") were needed to buy bad assets from banks, or the country and indeed, the World, was facing "The Great Depression, Part Two." I can't say that these same folks said this, but I know it was said by someone, that "Part Two would be WORSE than the 'original.' " President Bush endorsed the plan. In Congress, a great many Republicans opposed the plan, and it was about a week or more before the bill authorizing the money passed the House and Senate.^^^ It was then signed into law by President Bush. The vote was:

House of Representatives-268 FOR-148 AGAINST (3 Democrats-145 Republicans)

Senate-74 FOR- 25 AGAINST (9 Democrats-15 Republicans-1 Independent) (Source for vote totals in both houses from GOVTRACK.US)

Not long after becoming law, I believe it was Secretary Paulson, with the support of Chairman Bernanke, who announced that there had been a change in plans, and that the money would NOT be used to buy bad assets from banks, but rather it would be directly injected into troubled banks to provide capital. To keep this simple, to the media and to the public, the whole measure became known as "a bailout for banks." There's no question that the decision to change policy AFTER Congress appropriated the money, made an already skeptical public even more hostile. Regardless, hundreds of billions of dollars were funneled into banks, and even into AIG, an insurance company deemed "too big to fail." The government took a financial interest in a number of banks, and in AIG. I believe usually about a third stake in most banks, or at least those "too big to fail," and an astounding 80% in AIG.### The "new" Congress (the 111th) that took office this past January, voted to release the second installment of the "bailout measure."

To be continued.... (A word history is below the notes)

***While I don't remember every person who advocated such, there were a number of people, both politicians and economic "commentators," who took the view that "if you can't make it in the capitalist system, bye bye!" These folks would certainly correspond to those who argued against the New Deal, during and after the Great Depression.
^^^Congress decided to allot the $700 billion in two installments of $350 billion each, with the second part needing another favorable vote before the funds could be released.

### Whether you agree, disagree, or are indifferent to the decisions that were made, essentially by Bernanke and Paulson, in the last couple of months, I've heard comments from some conservatives who act as if the "bailouts" and and "government ownership stakes in companies" all started with the Obama Administration. I just wanted to remind them, in case their memories have failed. There are antidotes to such amnesia; they're called FACTS! And that's not to say that the current administration hasn't followed a similar path as the Bush Administration, it HAS.

Word History:
Switch-Noun-It "seems" that English first acquired the noun form of this word. Apparently it goes back to the Indo Europoean root "swei," which had the notion of "bend." Old Germanic continued with a root word "swih." Old High German developed "zwec," which meant a "wooden peg" which then was used for a target. In modern German, "Zweck" has come to mean "aim, goal, reason for something," and you can still see the association with "target." Low German developed "zwukse," which meant "a long, thin, flexible stick, or twig." (That takes it back to the "bend" notion) All sources mention the Low German dialect spoken around Hannover as being a direct link with the English word, as Hannoverian has "swutsche/schwutsche." Both Flemish and Dutch had, in times past (I could not find modern forms in either language), similar words (Some linguists say Flemish is a separate Germanic language spoken in Belgium. Some linguists classify it as simply a dialect of Dutch.) Anyway, it was picked up in English in the 1500s, and it seems to have been spelled "switz" and "swits," and meant "a flexible twig, but also a thin riding whip." It also seems that English picked up from another cousin, standard German, the "peg" sense of the word. This gave English "switchboard" in the latter 1800s, where in times past an operator plugged telephone lines (like "pegs") into openings. Further, during the 1930s, "switchblade" came from the notion of pushing the switch ("peg") to open the knife blade. Interestingly, a light "switch" might have elements of both meanings, as it certainly is something of a "peg," but the "flexible twig" notion could also apply, as we flip the "switch" back and forth. From what I have seen, American English used the notion of a "switch" to redirect a train from one track onto another.

The verb form will be covered next time.