Republican deregulation brought about fraud in mortgage lending and dangerous financial instruments which have collapsed the housing market, leaving a million or more homeowners facing foreclosure. The financial system is in disarray and might collapse from insolvency. The trade and budget deficits have exploded. The U.S. trade deficit is larger than the combined trade deficits of every deficit country in the world. The U.S. can no longer finance its wars or its own government and relies on foreign loans to function day to day...

Republicans have run roughshod over the U.S. Constitution, Congress, the courts and civil liberties. Republicans have made it perfectly clear that they believe that our civil liberties make us unsafe - precisely the opposite view of our Founding Fathers. Yet, Republicans regard themselves as the Patriotic Party. The Republicans have violated the Nuremberg prohibitions against war crimes, and they have violated the Geneva Conventions against torture and abuse of prisoners. Republican disregard for human rights ranks with that of history’s great tyrants. The Republicans have put in place the foundation for a police state.

I am confident that the Democrats, too, will make a mess. But can they beat this record? We must get the Republicans totally out of power, or we will have no country left for the Democrats to mess up. [More] . . read more

One can even argue about the correct date to take as the starting point of the present recession. It was certainly preceded by two great American bubbles, the dot-com bubble of the late 1990s and the U.S. housing bubble of this century. On one view, the present recession began on August 7, 2007 - only a year ago - when the sub-prime mortgage crisis came to the surface. That date could also be used to mark the bursting of the U.S. housing bubble, which is still having so damaging an impact on mortgage banking. Alternatively, one could reasonably start the present recession from the bursting of the dot-com bubble itself, which was the beginning of a bear market on Wall Street. That happened in the early months of 2000, already eight years ago. If this is a depression, it is a matter of choice whether one regards it as one or eight years old...

The present recession has some characteristics which make me think that it will be a relatively long one. The recession is centred on banking and property. In an ordinary recession, one has to wait for consumers to regain their confidence, which, in turn restores the confidence of business. Now one has to wait for the bankers as well. At present, banks are too anxious even to lend to each other, let alone to expand consumer credit or business loans. [More] . . read more

We must be thankful for this sign that American democracy is not completely dead and supplanted by executive branch authority. However, whatever bailout package that emerges will fail unless it takes into account the following.

Any package that maintains the mark-to-market rule and permits the resumption of short-selling will undermine itself. In panic conditions without the existence of a market, the mark-to-market rule results in asset prices being driven below their values, thus eroding balance sheets and producing insolvencies. Short-selling permits short-sellers to profit by destroying the share prices of institutions suffering balance sheet problems, thus eliminating their ability to borrow and driving them into failure. A bailout, however large, that maintains the mark-to-market rule and permits short-selling will pour money into a black hole. [More] . . read more