But inevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt. Local banks, sometimes pressured by the government, become too willing to extend credit to the elite and to those who depend on them. Overborrowing always ends badly, whether for an individual, a company, or a country. Sooner or later, credit conditions become tighter and no one will lend you money on anything close to affordable terms.
The downward spiral that follows is remarkably steep. Enormous companies teeter on the brink of default, and the local banks that have lent to them collapse. Yesterday’s “public-private partnerships” are relabeled “crony capitalism.” With credit unavailable, economic paralysis ensues, and conditions just get worse and worse. The government is forced to draw down its foreign-currency reserves to pay for imports, service debt, and cover private losses. But these reserves will eventually run out. If the country cannot right itself before that happens, it will default on its sovereign debt and become an economic pariah. The government, in its race to stop the bleeding, will typically need to wipe out some of the national champions—now hemorrhaging cash—and usually restructure a banking system that’s gone badly out of balance. It will, in other words, need to squeeze at least some of its oligarchs.
Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large.
Now to the Krugman; it starts like this:
Last week, in the face of protest demonstrations against Wisconsin’s new union-busting governor, Scott Walker — demonstrations that continued through the weekend, with huge crowds on Saturday — Representative Paul Ryan made an unintentionally apt comparison: “It’s like Cairo has moved to Madison.”
It wasn’t the smartest thing for Mr. Ryan to say, since he probably didn’t mean to compare Mr. Walker, a fellow Republican, to Hosni Mubarak. Or maybe he did — after all, quite a few prominent conservatives, including Glenn Beck, Rush Limbaugh and Rick Santorum, denounced the uprising in Egypt and insist that President Obama should have helped the Mubarak regime suppress it.
In any case, however, Mr. Ryan was more right than he knew. For what’s happening in Wisconsin isn’t about the state budget, despite Mr. Walker’s pretense that he’s just trying to be fiscally responsible. It is, instead, about power. What Mr. Walker and his backers are trying to do is to make Wisconsin — and eventually, America — less of a functioning democracy and more of a third-world-style oligarchy.
So, you might find Johnson persuasive now if you didn't then (and likely you do if you read Taibbi at all).
But to the eponymous point here...why? Well, why not?
Power serves power. And as we read in the earlier post...Power is godly and good--and the Lord has a plan and works in mysterious ways, and etc. Our mentality as a country (if countries have mentalities) is a mixture of Calvinist "election" and Market laissez faire and this has brought us to our current dilemma. Our demigods don't believe in free markets, rather they control the markets--and in doing so use the rhetoric of god and country to establish a market loving god.
So, with that rhetoric serving the powerful, they push. Why? Because the only that actually serves the common man is that Reaganite bugaboo--the government. And by government I don't mean President or Congress. I mean the departments that have been created to manage this vast land and help those of us without any real power. Independent agencies like the FDA, USDA, EPA and so on are there to regulate corporate greed. EPA tries to enforce protections to our air and water...corporations lobby congress to make laws to gut the power of the EPA. The Koch Bros are now the most visible and clear example of the real power and the real reason for this anti-government/pro-market mentality. They want no obstacles to their greed.
And if God the Father in His Heaven is Republican then all of this has been done for his glory...amen.
UPDATE: and now Minnesota
No comments:
Post a Comment