Trickle Down?

Trickle down as an economic principle was ripped from politicians' vocabularies after the Reagan administration. Speech writers and political strategists felt it put too much emphasis on giving to the rich and letting it "trickle" to common folk.

While vocabularies have changed, tactics haven't. Bailouts have been aimed at rich corporations. Even the "Cash for Clunkers" wasn't designed to help people; it was crafted to sell cars and prop up the auto giants. The premise is that if the banks and corporations prosper, the economy will grow and bailout main street, even though most of the economy is based on small businesses and consumer spending.

Additionally, main street is about to be hit with another "trickle down." Now that corporations have been bailed out, both Timothy Geithner and Alan Greenspan have predicted that taxes will have to be increased to pay-down the federal deficit.

Hopefully, Americans won't go along with higher taxes, but they are going along with the premise. Most even believe that subsidizing insurance companies, health companies and rich doctors is the best way to provide affordable health care.

It must be said--no, screamed from the roof tops,

"Trickle down works only if you want wet socks!"

Dennis A. Carroll, 3 August 2009

It's The Same Everywhere

In the eastern hemisphere the Afghanistan government and international governments are trying to tackle a different crisis.

In the western hemisphere the United States is trying to tackle an economic "crisis."

In a recent article from the Institute for War and Peace Reporting is a good article by Aziz Ahmad Tassal and Mohammad IIyas Dayee, titles Taleban Hamper Musa Qala Reconstruction Efforts.

In it Mullah Abdul Salaam, the district governor of Musa Qala says that after British and Afghan troops retook his district from the Taleban, there has been no assistance.  In the article he says, "My relations with Hamed Karzai (Afghan President) are very good.  But the president himself cannot do anything.  I have problems with Karzai's ministers.  They do not listen to the president and they promise to do things but they never do."

The economic "crisis" in the U.S. is a different problem, however, it appears that U.S. ministers and experts are like Afghanistan's ministers.  They are doing and have done very little.  

House of Cards, a program found on CNBC details many of the overlapping problems that "caused" (my quotes) the current financial situation.  Some of the causes stem from home buyers purchasing homes that they couldn't even pay interest on.  But, that is just the start.

It appears that marginal mortgages were consolidated into mortgage-backed securities.  These mortgages should have been rated EEE, but the ratings agencies routinely rated them AAA--the best with no, or limited risk.

Additionally, mortgage companies "targeted" sub-prime borrowers and then sold those mortgages to financial institutions that packaged and resold them.

Through the entire process regulators were "asleep at the wheel."  Former Fed Chairman Alan Greenspan had some interesting comments.  When asked about the complex repackaged mortgage instruments, he said that he didn't really understand them.  (He implied that he didn't discourage the use of financial instruments that the country's head financial wiz didn't understand.)  Greenspan also said that if he had tried to stop a crisis, there would have been ten percent unemployment and other negative economic consequences.  Seems that is his reason for NOT DOING ANYTHING.

Meanwhile, on the other side of the world, Anwar Khan, provincial council head said, "Promises made by the government and the international community have not been fulfilled in Musa Qala.  Residents in Musa Qala have nothing.  [ . . .]People are very disappointed in the government, they do not trust government and they do not listen to it."

The situation on both sides of the world are different, but they seem to share the common thread of government officials not listening and not doing as promised.