Business news sites nowadays like to ask:  Do you think the economy will get better, worse, or more of the same?  If those are the only options, it can’t get better.  It can only get better if there is fundamental change.

The US economy has been quite deliberately moved toward a planned economy, only the planning is not done by an official central committee of the ruling party, but by a combination of large private organisations and government regulation that "accidentally" suppresses small market participants.

The great chance – but in my view also the only hope – for the US, its citizens, breadwinners and voters, is to break out of the "big is better" mindset and return to "small – even if messy – is beautiful".

One of the most annoying oxymorons bandied about in discussions at all levels is the term "free market" and its derivatives.  There is no such thing.

"Free-marketers" argue that, for an economy to operate at optimum efficiency, resources need to be optimally allocated.  Resources will be optimally allocated if the goods and services produced with these resources are correctly priced, as an incorrect price leads to an inefficient allocation of resources.

The correct price in turn – being the price that leads to the most efficient allocation of resources – will most reliably result from a balance of supply and demand.  The mechanism that allows a price to be established through the balancing of supply and demand is a market, and it is free so long as there are no extraneous forces acting on either supply, demand or price.

That is the definition of the IDEAL free market.  "Ideal" is epistemological code for saying:  This construct BY NECESSITY AND DEFINITION cannot exist in the REAL world.  To make it work even approximately in the REAL world, regulation is a definitional requirement.  Regulation is not a contradiction to the principle of markets, but an existential necessity.

John McCain's chief economic adviser helped create what Olbermann calls "a legalized form of insider trading". This is a pretty in-depth report with a lot of details that shows how the road to four dollar gas begins with a little company called Enron (remember them?).

Keith Olbermann looks at the infamous "Enron Loophole" and how McCain Senior Advisor Phil Gramm is highly involved in policies that screwed the public for corporate / financial gain. They were able to take advantage of post-9/11 confusion and were awarded deregulation across the energy market.

Take a look at Countdown's special report and weigh in with your own thoughts and opinions below:

Since almost all of you forgot to read my diary of last February about Hutchinson, Mellor, and Olsen's The Politics of Money, I'm going to try to encapsulate the wisdom contained therein in a series of bullet points, with links added.  Maybe I was too long-winded back then.

(Crossposted at Docudharma)

I recently emailed the link to Jerome a Paris' diary about the financial market problems we're experiencing to a handful of friends, including two Republican friends. I probably shouldn't have, but my subject line was "I was right," as I've been asking them to explain to me how money can breed more money without some sort of basic tangible asset underlying it all. None of them ever bothered to respond to my original request, and only replied once I'd sent them a challenge, to their free market primacy, as it were.

So below I post first the reply I received from one of those republicans (who actually works in theatre, this always mystifies me). Then my reply, which I think is damn thoughtful. Hope you enjoy.

Last week's big run up in the dow jones was remarkable. The market rose on the teeth of the news that UBS, a major euro bank, had declared a major write-down of american mortgage securities.

This write-down and the rise in american stocks that it triggered can be marked down in your economic diary as the last major exercise of the notion that perception is the basis of market valuation.

The 350 point market rise was a function of market psychology. The experts in the corporate media explained this rise as the market expressing the belief that the heart of credit market weakness, the credit crisis we are experiencing, had exposed itself through the UBD writedown.

The feds backed a takeunder of Bear Stearns (BSC) by JP Morgan (JPM) with a $30 billion special financing. JP Morgan will buy Bear for about $2 per share or $236 million, a 93% discount from $30 close on Friday. This week so far, BSC shares, although suffered a monumental loss, always traded significantly above the $2 mark. The lowest it got was $2.84. Now it is trading close to $7, a full 250% above the takeunder price. The market is simply not buying the Feds BS and don't believe that the deal would go through or is necessary.

About three years ago when traveling though the Midwest I happened upon a conversation that struck me very odd. The discussion going on was about the mortgage crisis. The point of the conversation was clear, Midwesterners, the salt of the earth, the no need for government help kinds of people, or as I like to put it, the responsible Americans, were talking about walking away from their home loans and being in essence irresponsible. That conversation didn’t compute well in my head so I probed a little. I asked why? Why would these people known for their practicality born out of surviving extreme harsh winters walk away from loans and houses that they had called home? The answer was simple and direct. They were walking away from their homes because they simply couldn’t afford the loans that they had taken out. It was either eat or pay everything to the mortgage and eating is kind of vital to life. The stigma of bankruptcy still runs deep in these parts. The pain they felt added creases to their faces that previously weren’t there. They were walking away because that was their only choice. I came to the conclusion that something had gone terribly wrong. This disturbed me so much that I tried desperately to put it out of my head.

Well it ain't pretty in the global markets today.  In a matter of hours, the NYSE will open.  We will find out what is going to happen here in New York, but one thing rings true.  The economy is at risk: recession is looming, and overseas markets are taking an enormous hit.  This will effect everything.  For without a solid economy, the mighty United States loses its power.

I read an article and may have cited it here, last year, about the
brokerage/banks having collateralized and loaned out the same paper
several times. A derivative pyramid scheme to implode on any hiccup.

Some tiny percent of all mortgages called subprime are failing,
which are a tiny percent of all subprimes, in which subprimes are a tiny percent of all mortgages.

Subprimes dont' do all this. It's all a lie. That is their cover.
It is the leveraged and collaterized derivatives ponzie collapse.

It was layed out here, see my history of Diaries on the subject.

Written by Kristina Gupta, Policy Fellow
National Women’s Law Center

Yes, it’s true – sex matters in the housing market. Research shows that women are more likely to receive subprime mortgages than men. And because subprime mortgages are a driving force behind foreclosures, as the housing market continues to struggle, more and more women may lose their homes.

http://nwlc.blogs.com/...

A look at where it all began.

In my opinion, the media seems to be extremely supportive of "Free Trade." They're always pointing out why all Americans are benefiting from it and how Americans should support free trade. Everyday I ask myself why?

While it's run up to the top of Amazon, I'll not be spending several slowly vanishing-in-value greenbacks to add to the sales of the former Fed Chairman's finger-pointing denial.

"Don't you care to know," some might ask, "The deepest thoughts of the longest serving central banker in America's history?"

If FDR were president today, he'd fill government with his kind of people--law-abiding, populist progressives--just as Bush fills it with lawless, cartelist plutocrats.

For a century America has had two competing economics, with corresponding conflicting visions as to whom and how much to tax and on what to spend the budget.

On one side, the tyranny of "pure capitalism" and "free market" plutocracy: supply side and "win-win": government as a tool to transfer wealth from the working class to the rich. On the other, Keynesian economics and protective regulation--progressive policies that build the working class for the future: government as a tool (1) to take back from the cartelists some of the excessive profits they wring from workers and consumers and (2) to spend that money to promote the general welfare.

Click below to read what FDR had to say about it in his greatest speech of 1936--possibly his greatest speech of his entire career--and to get a link to a scanned copy of his actual original draft with notes--

I've been following the Mortgage Meltdown quite closely, and have posted things here on days when I wanted to hear from the Kossack Community.

Today is another one of those days.  While I'm no Warren Buffet, I consider myself a novice chart reader.  And to me, there's nothing but more trouble once you look at this graph:

Mary makes a well-written case for Single Payer health insurance at Pacific Views today.

"America's health care system is imploding. Despite the fact that America devotes more of its GDP to health care than any other developed country, the real outcome for a significant portion of our country is miserable. And despite all the initiatives that claimed to fix the problem, the problem is getting worse."

As someone who administers state Medicaid in Pacific County and who becomes aware of as many uninsured citizens in an hour as an enterprising researcher could find in a day, I consider the above seriously understated.

"Getting worse" actually means something far fouler smelling than what you see in Sicko.

Mary has more:

"Universal health care is particularly unsuited for a market-based approach because people are unable to do a lot of comparison shopping when they are sick and the overwhelming need for health care is when someone is sick, not when they are well."

There are some basic rules to help us navigate, reaction rather than forecast.

How bad is the bush borrow and print disaster, when does it
actually happen, what sort of interventions interrupt natural
timing? All are unknown, you don't need to know, just react.

How to navigate the republican borrow and spend doublespeak
dollar bankruptcy disaster below.