Americans really want to know why we don't make stuff anymore. What happened to American manufacturing? Why is everything made in China now?

The answer: Because we are now at the economic -- and political -- mercy of the nation's financial-services sector.

Here's an illustration of what's happened to America in the past 30 years, taken from page 33 of Kevin Phillips' fine book, Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism, which predicted the global economic crisis well before it happened:

As Phillips explains, this shift came about because both political parties in Washington -- well fed with Wall Street money -- decided America's economic future lay in the financial sector, not in manufacturing.

Phillips describes in detail how the financial-services sector came to be seen within the Beltway as "the winner" for politicians to back as the nation’s economic workhorse, fueled in no small part by the ongoing activities of the President’s Working Group on Financial Markets, even as the nation’s manufacturing capacity was slowly being gutted. He explores how this was facilitated by Republican governance this past decade, particularly from a Bush White House that favored the familial oligarchical approach to economics, and rapidly accelerated during the post-9/11 push to expand credit. This was manifested in the "securitization" mania that took root in the context of a "Wild West" milieu for all kinds of moneymaking devices, especially low-interest adjustable-rate mortgages.

In the process, both of America's political parties have largely been subsumed by the financial-services sector. The most recent manifestation of this is the work of the supposedly bipartisan Catfood Commission, whose recommendations, if followed, would produce "a major transfer of income upward, from the middle class to a small minority of wealthy Americans," according to Paul Krugman.

What's particularly striking about its work is that it quite patently intends to place all the burden for solving the deficit on the backs of working people (mainly through serious Social Security cutbacks) while steadfastly refusing to consider new ways of improving its revenues, as Matt Yglesias has observed.

And atop that list of ignored potential revenue sources: The financial sector.

Dean Baker made an acute observation about this:

The deficit report put out by the commission's co-chairs, Alan Simpson and Erskine Bowles, had one striking omission. It does not includes plans for a Wall Street speculation tax or any other tax on the financial industry.

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Paul Krugman discusses what he calls "the pundit delusion," in which pundits believe the day-to-day inside baseball (the stuff they love to endlessly recycle) is what determines the fate of the administration, when it really comes down to how well people are doing economically:

What should Mr. Obama have done? Some political analysts, like Charlie Cook, say that he made a mistake by pursuing health reform, that he should have focused on the economy. As far as I can tell, however, these analysts aren’t talking about pursuing different policies — they’re saying that he should have talked more about the subject. But what matters is actual economic results.

The best way for Mr. Obama to have avoided an electoral setback this fall would have been enacting a stimulus that matched the scale of the economic crisis. Obviously, he didn’t do that. Maybe he couldn’t have passed an adequate-sized plan, but the fact is that he didn’t even try. True, senior economic officials reportedly downplayed the need for a really big effort, in effect overruling their staff; but it’s also clear that political advisers believed that a smaller package would get more friendly headlines, and that the administration would look better if it won its first big Congressional test.

In short, it looks as if the administration itself was taken in by the pundit delusion, focusing on how its policies would play in the news rather than on their actual impact on the economy.

Republicans, by the way, seem less susceptible to this delusion. Since Mr. Obama took office, they have engaged in relentless obstruction, obviously unworried about how their actions would look or be reported. And it’s working: by blocking Democratic efforts to alleviate the economy’s woes, the G.O.P. is helping its chances of a big victory in November.

Can Mr. Obama do anything in the time that remains? Midterm elections, where turnout is crucial, aren’t quite like presidential elections, where the economy is all. Mr. Obama’s best hope at this point is to close the “enthusiasm gap” by taking strong stands that motivate Democrats to come out and vote. But I don’t expect to see that happen.

What I expect, instead, if and when the midterms go badly, is that the usual suspects will say that it was because Mr. Obama was too liberal — when his real mistake was doing too little to create jobs.

Using racist code words is built into the psyche of all conservative pols so when Mrs. Crazy spouts off that the USA could become "Zimbabwe," they understand that what she's really saying is Obama is not a citizen, but an African/Muslin hiding out in the White House and undermining our values like so many Russian cold war spies did in the 70's and 80's. That's according to many movement conservatives like the Abramoff run College Republicans of days gone bye.

Laura Ingraham says that Bachmann is not afraid to take on President Obama. What a stud, girl. Here come the black helicopters everybody. Phony 'One world' conspiracy theories have populated the Militia and Patriot movements for decades and have proven to be quite profitable actually for those that transmit these seriously unbalanced views.

Bachmann: Do we really want to tie our fortunes to Venezuela or Zimbabwe?

Ingraham: We're tied to China.

Bachmann: That's right, we are because they've been buying our debt.

Ingraham: We are in a global economy.

Bachmann: Of course, of course, but we don't want to become MORE dependent. That's really the point.

She could have said Greece or Iceland or Spain, but no...it's Zimbabwe. You get the imagery.

Matt Yglesias writes:

The reassuring thing about a lot of the nonsense you hear from the right is to think to yourself “well, these guys are liars.” Other times you see something like this transcript of Rep Michele Bachmann talking to radio host Scott Hennen and you come face to face with the realization that some key figures in the movement are dumber than Jonah Goldberg.

Bachmann: Well, President Obama is trying to bind the United States into a global economy where all of our nations come together in a global economy. I don’t want the United States to be in a global economy where, where our economic future is bound to that of Zimbabwe.

Of course the existence of a global economy in which events outside our borders impact us is not something Barack Obama dreamed up, and the idea that having world leaders gather for occasional meetings constitutes a “one world government” is insane. Is her idea that the President should never meet with anyone? Does that undermine our sovereignty?

Gawker writes:

A few thoughts:

• Zimbabwe isn't in the G20. It would take about G200 before Zimbabwe gets an invite.
• The entire post-Cold War economic landscape has been one of a "global economy."
• Everything else she said is stupid.
• That's all.

The MNProgerssive Project: Michele Bachmann's latest conspiracy theory: G20 Summit is to talk about a one world government

Blue America's Tarryl Clark is a great choice to take Michele on so please support her if you can. If you live in the district I'm sure they are looking for help. It won't be easy, but at least we have a good candidate in Bachmann-land.

Peaceful G20 protest at Queen & Spadina from Meghann Millard on Vimeo.

You may ask yourself, why aren't lefties rioting in the streets because of the economy just like what we're seeing at the G20?

Digby has the answer: The Miami Model.

People keep asking where "the left" is and why they don't take to the streets in light of these neo-liberal policies wreaking havoc on working people everywhere. Where is the populist uprising from the left and why there isn't more direct confrontation of the corporatist mindset. It's a good question, but you have to wonder why we never cite these regular protests and why we don't bother to comment on the tactics that are used against them. Are we on the American left really not part of this? Do we philosophically disagree with the critique, even now, after everything that's been revealed during this economic crisis? Are these people wrong?

Now, I understand that these folks have gotten the reputation for being thuggish and destructive, largely based on the Seattle protests over a decade ago. But it's quite clear by now that this is a phony image, conjured up by the authorities to justify their police state tactics against the protesters:

They call it the Miami Model...read on

I'm going to do another post on this soon, but the shorter version is that beating the crap out of people after tasering them and then arresting them does put a damper on things.

Protesters were beaten with tear gas, sticks, rubber bullets . . . You can watch police stun cowering protesters with Tasers on YouTube. Last year, the city agreed it had trampled citizens’ right to free speech by forcing marchers back from planned protests and settled out of court with Amnesty International.

The above video shows protesters singing 'Oh, Canada,' and for no reason at all the police open fire and viciously attack them. It's safe to say that they have been emailed the Miami model and are implementing it quite nicely. Now they can add "singing" to their long list of actions that are forbidden by law enforcement when they encounter protesters.

This pretty much says it all: General Petraeus is going to Afghanistan at the President's request to lead the war effort there, but his wife Holly's struggle to defend our troops against the predatory lending practices of car dealers has been lost. Holly will become another military spouse who lost a battle with car dealers while a loved one serves overseas. Both Houses of Congress are apparently willing to "support the troops" only when it doesn't get in the way of doing favors for the guys raising money at those rubber-chicken campaign fundraisers back home.

Let's hope the General has better luck against Mullah Omar than his wife had against Tony Federico. Tony's the auto dealer we wrote about the other day - the one who says he always gets the best deals for his customers, but doesn't want anyone checking to see if that's true or not. In this Congress, the score is now Tony 1, Holly 0.

The House/Senate Committee approved a carve-out for auto dealers that exempts them from oversight by the Consumer Financial Protection Bureau. There are no good policy reasons for that. The argument that "car dealers had nothing to do with the economic crisis" doesn't wash. As Jeff Sovern observed in Politico, reform is designed to prevent the next crisis as much as it is to avoid a repeat of the last one. With nearly a trillion dollars a year written in auto loans each year, and with auto dealers having the same perverse incentives as mortgage brokers, it's a tragedy waiting to happen.

And it's a tragedy that is happening - every day, in communities all over the country. Holly Petraeus stepped in because she was one of many military family members who grew tired of seeing soldiers exploited by fast-talking bait and switch artists at a vulnerable and frightening time in their lives. When it push comes to shove, gladhanding contributors was more important to Congress than looking out for the interests of our soldiers ... and other ordinary citizens. The racially discriminatory patterns behind auto lending didn't disturb them, either, nor did the average of $647 added to the cost of each vehicle as a result of dealer markups. (More info here and here.)

Negotiators are working to undo a little of the damage done by this decision. As the AP reported yesterday, auto dealers will still be covered by Federal truth-in-lending laws, although the Fed will have to write a justification every time it tried to write rules that specifically deal with auto loans. And there's a plan to create a "fast track" for the Federal Trade Commission to write rules that address auto loans.

But these are band-aids on the gaping wound created by this sweetheart deal. Every lender but one will have to answer to the Consumer Financial Protection Bureau, leaving a messy and confusing two-tiered oversight system that's ripe for exploitation.

We promoted the CREDO/Campaign for America's Future fax campaign last week, saying " Send a fax. Call your Senator and Representative. If you do, we can have you in a nice financial reform package, complete with consumer protections against auto dealer rip offs." Apparently I was overselling - which may qualify me for a job at an auto dealership - but send the fax and make the call anyway. That will let them know you're unhappy, and that you want the FTC and the Federal Reserve to push for the strongest possible regulations. And let the Senators who voted to encourage Tony's giveaway (my Senator, Barbara Boxer, is one of them) know you want them to push for real oversight of these loans.

General Petraeus specializes in counterinsurgency, which is defined as "armed conflict against an insurgency by forces aligned with the recognized government of the territory in which the conflict takes place." Too bad he didn't share some of his techniques with his wife before she went to plead her case before Congress. In the battle between our troops and Tony Federico, the troops never really had a chance.

______________________

Cross-posted (with some rewording) at Huffington Post and Our Future as part of the Curbing Wall Street project.

— Photo used under Creative Commons license by Flickr - user bitzcelt.

A fellow blogger tipped me to this article in Business Insider that graphically represents just how wide the income gap has become. And it's simply staggering: The gap between the top 1% and everyone else hasn't been this bad since the Roaring Twenties

Go take a look at the fifteen charts. And then tell me why we place so much trust in the free market system when it's clear it only works for a small percentage of Americans.

Photographs of the former Icelandic bankers who left their country after the financial crash were stuck on the urinals. (AFP: Olivier Morin, file photo)

I have to say, I like that Icelandic style! But even more than putting our bankers on urinals, I'd be thrilled to see them in orange jumpsuits. How about you?

REYKJAVIK — More than a year and a half after Iceland's major banks failed, all but sinking the country's economy, police have begun rounding up a number of top bankers while other former executives and owners face a two-billion-dollar lawsuit.

Since Iceland's three largest banks -- Kaupthing, Landsbanki and Glitnir -- collapsed in late 2008, their former executives and owners have largely been living untroubled lives abroad.

But the publication last month of a parliamentary inquiry into the island nation's profound financial and economic crisis signaled a turning of the tide, laying much of the blame for the downfall on the former bank heads who had taken "inappropriate loans from the banks" they worked for.

On Wednesday, the administrators of Glitnir's liquidation announced they had filed a two-billion-dollar (1.6-billion-euro) lawsuit in a New York court against former large shareholders and executives for alleged fraud.

[...] In addition to its New York suit, Glitnir said it had "secured a freezing order from the High Court in London against Jon Asgeir Johannesson's worldwide assets, including two apartments in Manhattan's exclusive Gramercy Park neighbourhood for which he paid approximately 25 million dollars."

Gudbjartsdottir said Johannesson had just 48 hours to come up with a satisfactory list of his assets.

"If he does not give the right information he faces a jail sentence," she said.

Four former Kaupthing executives, who all live in Luxembourg, have meanwhile been arrested in Iceland in the past week and Interpol has issued an international arrest warrant for that bank's ex-chairman, Sigurdur Einarsson./blockquote>

If I had a dollar for every person I've met in the past few weeks who believes the Dems just added another tier of unemployment checks, we wouldn't even need a Tier 5. I hate to sound like a broken record, but it still astounds me that Democrats are saying there's "no political will" to add another tier of unemployment benefits, that they're not hearing "any popular support" for spending the money.

That's because people think that's what Congress just passed, you morans. Are the Congressional Dems really that stupid and out of touch? Yes, they are. And they'll pay for it dearly in the mid-terms. And you know what? They deserve whatever happens if they let all these despairing people fall off the unemployment rolls.

From The Pew Foundation:

Americans are united in the belief that the economy is in bad shape (92% give it a negative rating), and for many the repercussions are hitting close to home. Fully 70% of Americans say they have faced one or more job or financial-related problems in the past year, up from 59% in February 2009. Jobs have become difficult to find in local communities for 85% of Americans. A majority now says that someone in their household has been without a job or looking for work (54%); just 39% said this in February 2009. Only a quarter reports receiving a pay raise or a better job in the past year (24%), while almost an equal number say they have been laid off or lost a job (21%). Read more:

Good strategy. They're really going to look bad if they openly work against financial reform. What they'll do when no one's looking, well, that's another story:

President Obama challenged some of the nation’s most influential bankers on Thursday to call off their “battalions of financial industry lobbyists” and embrace a new regulatory structure meant to avert another economic crisis.

Speaking in the bankers’ backyard, at the Cooper Union in Manhattan, Mr. Obama castigated a “failure of responsibility” by Wall Street that led to the financial crisis of 2008, and he pressed his case for what he called “a common-sense, reasonable, non-ideological” system of tighter regulation to prevent any recurrence. He took issue with the claim that his proposal would institutionalize the idea of future bailouts of huge banks.

“That may make for a good sound bite, but it’s not factually accurate,” Mr. Obama said. “It is not true. In fact, the system as it stands is what led to a series of massive, costly taxpayer bailouts. And it’s only with reform that we can we avoid a similar outcome in the future. In other words, a vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth. End of story.”

He said scrupulous business leaders had no reason to resist his regulation plan. “The only people who ought to fear the kind of oversight and transparency that we’re proposing are those whose conduct will fail this scrutiny,” he said.

He wants the following items included in the final bill:

Protect taxpayers from too-big-to-fail firms

Impose the Volcker rule, named for former Fed Chair Paul Volcker, which stops firms from making large bets with their own money, or “proprietary trading”

Make derivatives trades transparent

Create a consumer protection agency

Institute pay reforms to give investors a say over executive pay.

Market reaction? A shrug.

One of the more disturbing -- and little noted -- aspects of the Supreme Court's execrable ruling in Citizens United v. Federal Election Commission is the way it legitimized, if inadvertently, the far-right operatives at Citizens United.

These are, after all, some of the sleaziest and most mendacious political operatives in business in America today. Citizens United has a record not only of peddling fabrications, distortions, and baldfaced lies, they are one of the more significant transmitters of far-right extremist beliefs into mainstream politics.

Remember that David Bossie, the longtime head of the organization, was fired by Republican Rep. Dan Burton in 1998 for distributing doctored audio tapes of prison conversations with former Clinton aide Webster Hubbell that purported to demonstrate Hillary Clinton's complicity in corruption, but which in unedited form clearly demonstrated the opposite.

This is an organization that should have no credibility on any level, except among the fringes of the right where any concocted smear is gobbled up like cotton candy.

Yet there was Bossie, along with his cohort from CU, Stephen K. Bannon, getting an entire hour of Sean Hannity's Fox News show last night to promote their latest fabrication, a pseudo-documentary titled Generation Next.

The film's subject is perhaps Citizens United's biggest lie yet: It claims that the current economic crisis is not the product of misbegotten conservative governance, but rather is the product of Dirty F--king Hippies and their degenerate "Me Generation" ethos.

Bossie: Look, the Greatest Generation, the World War II generation, it would never dawn on them to take the type of risk that these people did. The people who were the '60s hippies, the people at Woodstock in the '60s, who became the yuppies of the '80s and really the barons of the 2000s, and really are the leaders around the country that helped cause this. It really is a remarkable thing.

In other words, Bossie and Co. have concocted the perfect fantasy for right-wingers in denial over the complete, fully manifested failure of their approach to governance -- one that lets them, once again, blame those dirty hippies for everything wrong with America. No wonder it was so popular at the National Tea Party Convention and at CPAC.

Bossie has been in the business of peddling lies for a long time (and I've been writing about him quite awhile too

). In the '90s, he was one of the sleaziest of a remarkably slimy collection of characters peddling anti-Clinton conspiracy theories, teamed up with Floyd "Willie Horton's Godfather" Brown. Brown himself resurfaced in the last election peddling "Obama is a secret Muslim" smears and racially incendiary ads in the guise of an "Expose Obama" outfit run by a far-right nutcase.

Eric Boehlert compiled a rundown of Bossie's sleaze for Salon back in 2004:

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