Deep Thought (by Susie at Suburban Guerrilla)
Pogge: “If the pundit you’re reading seems more concerned with the effect the economic crisis is having on an ideology than with the effect the economic crisis is having on actual human beings, then the pundit you’re reading is irrelevant.”

Matt Davies

Republican ideology failed us:
Revenge of the Glut (by Paul Krugman)
[There is an] almost eerie correlation between conservative praise two or three years ago and economic disaster today. “Reforms have made Iceland a Nordic tiger,” declared a paper from the Cato Institute. “How Ireland Became the Celtic Tiger” was the title of one Heritage Foundation article; “The Estonian Economic Miracle” was the title of another. All three nations are in deep crisis now. For a while, the inrush of capital created the illusion of wealth in these countries, just as it did for American homeowners: asset prices were rising, currencies were strong, and everything looked fine. But bubbles always burst sooner or later, and yesterday’s miracle economies have become today’s basket cases.

Because it’s based on belief, rather than observations of the real world:
Gary Makes a Good Point (by Gavin Kennedy at Adam Smith's Lost Legacy, thanks to Economist’s View)
Where Adam Smith, and others who came afterwards, diligently explained, without notions of invisible 'hands’ or ‘beings’, more associated with ‘pusillanimous superstition’ than with scientific analysis, the post-1950s generations of supposedly modern, scientific economists, with batteries of mathematical techniques at their disposal, did, was and is to take their science back to rest on a primitive mumbo jumbo, which would not be out of place among the credulous generations of the Middle Ages and those who lived even earlier.

And refusal to face reality can lead to complete collapse:
Social Collapse Best Practices (by Dmitry Orlov, author of Reinventing Collapse, thanks to from InsightAnalytical)
If there is one thing that I would like to claim as my own, it is the comparative theory of superpower collapse… The theory states that the United States and the Soviet Union will have collapsed for the same reasons, namely: a severe and chronic shortfall in the production of crude oil (that magic addictive elixir of industrial economies), a severe and worsening foreign trade deficit, a runaway military budget, and ballooning foreign debt. I call this particular list of ingredients “The Superpower Collapse Soup.” Other factors, such as the inability to provide an acceptable quality of life for its citizens, or a systemically corrupt political system incapable of reform, are certainly not helpful, but they do not automatically lead to collapse, because they do not put the country on a collision course with reality.

Academia failed us, too:
The Financial Crisis and the Systemic Failure of Academic Economics (by David Colander et al., thanks to Economist’s View)
[Abstract:] The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession’s insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets.

So did the media, which continues to fail us:
Dealing With BANKRUPT Banks: Nationalization or Welfare (by Dean Baker)
The media continue to do more to misinform the public than to inform them when it comes to plans for fixing the financial system. Following the absolute worst in journalistic practices, a front page Washington Post article explains the Obama administration's policy by telling readers that the "approach reflects Treasury Secretary Timothy F. Geithner's philosophy of how governments should respond to financial crises."… The reality is that the reporters have no clue as to what Timothy F. Geithner's philosophy of how governments should respond to financial crises. The reporter knows what Timothy F. Geithner told them, so why don't they just stick to passing this information along to readers instead of speculating about his innermost thoughts?

The excursion into philosophy deflects readers from the real issue. Mr. Geithner wants to use taxpayer dollars to keep bankrupt banks in business. In effect, he wants to tax teachers, fire fighters, and Joe the Plumber to protect the wealth of the banks' shareholders and to pay high salaries to their top executives. No readers of this piece would understand that this is the process being described… It would be nice if the Post and the rest of the media would report honestly on the bank bailout and stop trying to conceal plans for a massive redistribution of wealth to the bank shareholders and their top executives.

Is the current administration bold enough in its proposals to deal with the crisis?
Martin Wolf on Fareed Zakaria: Worth a View (by dakinikat at The Confluence)
Wolf’s critique of both the stimulus and the plan for restructuring banks is that they are not big and bold enough. They do not really contain change. They both continue to reward the same old same old… Until we delink the interests of Wall Street from the Democratic Party and from this President, my guess is that we will not see what we need to see in the way of reform and stimulus. Meanwhile, I, like Martin Wolf, am hunkering down for a very prolonged period of economic nastiness because all of this response is still very much politics as usual. The stakes are way too big right now for this administration whose main talent is just more politics that rewards its minions.
Click here to watch the interview.—Caro

And if not, will they get a second chance?—Caro
Plan B (by Noam Scheiber, The New Republic, thanks to Economist’s View)
[Treasury Secretary Tim] Geithner's goal with the bank plan may not have been to solve the crisis so much as demonstrate he could eventually be trusted with more money. Talk to administration officials these days, and you typically hear phrases like "show results" and "rebuild credibility"… And here's where things get truly alarming: If Obama officials are able to "show results"--which most observers take to mean increased lending--then they probably won't need the money they'll be able to tap. But, if they're unable to show results, it will most likely have been for lack of money, which they'll have a hard time getting more of. It's a classic CATCH-22: The very reason you'd ask for help disqualifies you from receiving it.

Economy shrinks at fastest pace in 26 years (AP)
The economy contracted at a staggering 6.2 percent pace at the end of 2008, the worst showing in a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession. The Commerce Department report released Friday showed the economy sinking much faster than the 3.8 percent annualized drop for the October-December quarter first estimated last month. It also was considerably weaker than the 5.4 percent annualized decline economists expected.

Dow industrials fall below 7,000; lowest since '97 (AP)
The Dow Jones industrial average plunged below 7,000 Monday for the first time in more than 11 years as investors grow even more pessimistic about the health of banks, and in turn the economy. A staggering $61.7 billion in quarterly losses at insurer American International Group Inc. touched off fresh fears about the health of the nation's financial system.

Click here for more politics and media news headlines.

Carolyn Kay
MakeThemAccountable.com