Puget Sound Liberals Weekly Newsletter

Puget Sound Liberals Weekly Newsletter #136

Enhancing Freedom, Opportunity and Cooperation in Puget Sound and Beyond

Through informing and networking Liberals and Liberal Organizations.

Our vision is hundreds of thousands of well-informed Puget Sound Liberals working together.

2500 members August 22, 2008

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                        Table of Contents *Featured Articles

About Puget Sound Liberals

Opportunities, Petitions and Feedback

Commentaries from Our Members

Vhey Benet in Opposition to Barack Obama

Dave Miller on Barack Obama Must Strike Back

Liberals and Democrats Links to the Beef

Our Democratic Platform

State and Local Links to the Beef

Smear Campaign Conducted against Jason Osgood

Washington Primary Election Results*

Endorsements for General Election Candidates

Comparing State Income Tax Rates

WashingtonCAN: Summer Leadership Conference

Nation and World Links to the Beef

Our Debt Crisis*

What’s with Recent Oil Price Declines?

Our Liberal Spirit

Irrational Exuberance

Recommended Books

Our Political Values

Our Political Priorities

·       Fair Clean Elections and Open Government

·       Fair Taxes and Competent Spending

·       Investment for Productivity

·       Quality Health, Education, Jobs, Income and Retirement

·       Environmental Protection and Energy Independence

·       Security and Equal Rights

·       Justice and Peace Everywhere

·       International Cooperation and Leadership

Conservatives oppose all of these

     Let’s End Our National Nightmare

         Let’s Restore Our American Dream

More on Conservative opposition to our American Dream

Washington State’s 4 Major Needs

·       Federal Funding for Health and Education

·       A Progressive Income Tax

·       Public Campaign Financing

·       Replacing Republican Legislators

Quote of the Week

But how do we know when irrational exuberance has unduly escalated asset values. . .?   From December 5, 1996 speech by Federal Reserve Chairman Alan Greenspan For more.

To Dream the Impossible Dream Don Quixote

Calendar of Events

King County Democrats - LD Meetings            Some 2008 Legislature Lobby Days

Thurston County Progressive Net                  Western Washington Fellowship of Reconciliation

Alliance for Democracy                               Democratic Underground.Com

Town Hall Seattle Calendar                            Sierra Club Cascade Chapter Calendar



Washington Public Campaigns Calendar          Conversation Cafe      Drinking Liberally

Washington State Labor Council                     Whatcom County Peace and Justice Calendar

Wallingford Neighbors for Peace and Justice – Friday Night Movies      Liberal films on PBS

Calendar of Events

Thursday, August 28 at 5 PM at Rick Hegdahl’s home (104 - 165th Avenue NE) – Lake Hills Liberals Salon, watch and discuss Barack Obama’s Acceptance Speech. Bring beverage, fruit, cheese, crackers, etc

Thursday, August 28 at 7:30 PM at Mukilteo Coffee Roasters, Inc. (5331 Crawford Road, Langley) – Health Care Forum sponsored by Island County Chapter of Health Care for All - Washington

Saturday, September 6 at 6 PM at Mainstage Comedy Club (315 – 1^st Avenue North, Seattle) – Second annual “Pro-Choice Pop Star,” a karaoke contest, comedy show and cocktail mixer in support of NARAL Pro-Choice Washington.

Barbara Rader of Black Widow Web Development created our Puget Sound Liberals Website, to which I can easily add, modify and remove files. Learn more about this unique company, which offers a 50% discount for organizations that promote social justice and environmental stewardship. Dave Thomas

Opportunities, Petitions and Feedback

Communication with Our Members and Feedback

Our Website has been improved. Our Basic Training menu now offers more commentaries. Our Commentary menu offers four new pages formed by combining commentaries which have appeared in our newsletter:

· 2008 Elections

· Three Crises: Peak Oil, Financial Bubble and Global Warming

· Reforming Our Washington State Tax System

· Affordable Housing and Urban Transportation

These will be updated as more relevant commentaries are published. Dave Thomas

Opportunities

See What the Iraq Occupation has cost us to this minute.

How Would You Spend $3 Trillion instead of Iraq?

Thanks to Ray McBain, some great pictures of the Olympics opening ceremony in China.

Try MoveOn’s new game: What’s the difference between President Bush and Senator John McCain?

Wellstone Action provides organizing tools online.

Wellstone Action canvassing instructions

See Paul Loeb’s organizing tools: one, two, three.

See the Story of Stuff (video).

Visit Project Vote Smart for information on candidates.

Petitions and Donations

Endorse the Global Marshall Plan proposed by the Network of Spiritual Progressives.

Tell your congress members that we don’t need to open more areas for drilling for oil.

Tell your congress members to require our Dept. of Transportation to use realistic gas prices.

Tell your congress members to provide more money for public transit.

Tell our Health and Human Services Secretary that contraception is not abortion.

Commentaries From Our Members

Email from Vhey Benet

Dear Editor, the following is a quote from the commentary, "Racism, The Elephant in the Closet":

"... Obama would likely be leading by 10% more (in the polls) except for the racist anti-African American vote. If Barack Obama was the same as he is, except that he was white, he would likely be leading by 15% or more".

This supposition is laughable at best, and dangerously naive at worst. Is there racism in America? Undeniably. If Senator Obama were white would all his problems go away? Most likely not. Why? Because the real problem his supporters do not want to face is that he is inexperienced, lacking in judgment (see Wright, Ayers, Rezko etc.) and untrustworthy (see FISA, campaign finance, etc.). The truth is that if Obama was white, he would still be sitting in the Senate and maybe he would have held a few hearings on Afghanistan by now.

I wish all of us who are so desperate to see the Republicans ousted from the White House would take an honest look at what is happening and consider we still have a chance to nominate a strong candidate to beat John McCain in the Fall. Her name is Senator Hillary Clinton. Our convention is intended to be a lively, democratic process by which the stronger candidate emerges after a fair nomination fight and vote. It was never and is not intended to be a scripted event with "unity" shoved down our throats.

The DNC and party elders are so determined to hold a sham of a convention and turn it into a coronation for a very flawed and inexperienced individual, that everything our party stands for is in jeopardy. Every single Democratic should be outraged by this. Our party is being stolen by the very people who are supposed to be it's stewards.

So, do I think racism is the elephant in the closet? Not hardly. It has been out front and center since Obama and his campaign operatives began leveling charges of racism against Bill and Hillary Clinton in the primaries... and Party Elders were silent. Silent as the Clintons (who gave more opportunities to People of Color in their 8 years in the White House than any previous administration) were slandered. It was reprehensible.

And it continues. Level any criticism of Mr. Obama and the cries of racism are deafening. When did we become a Party that cannot tolerate an examination of the persons who say they want to represent us? And most especially for the office of President. That person deserves unrelenting scrutiny without charges of racism. Otherwise how can we responsibly choose? And I do intend to choose.

I have my vote in November. How I use it still remains to be seen. Vhey Benet

Email from Dave Miller on Barack Obama Must Strike Back

Dave, See article below with what might be a pretty astute observation about why Democrats manage to lose presidential elections. It is extremely frustrating for me to watch once again as our Democratic presidential candidate and his campaign remain quiet in the face of most outrageous and false claims against him without fighting back (e.g., McCain ads and new book by Jerome Corsi).

Supposedly, Obama's campaign is gearing up to strike back hard after the convention. This is too late. Can't Obama and his campaign understand even recent history? John Kerry hesitated for a month to respond to swift boat attacks and may have lost the election due to that (but also probably because of gross voter disenfranchisement and tinkering with electronic voting machines). The Obama campaign should respond aggressively and immediately to any false advertisements, statements, books or whatever that come from the Republic side.

That it is not doing so as McCain's poll numbers approach Obama's demonstrates again why Democrats lose. The fact that Democrats do the same thing over and over nearly drives me nuts! Dave Miller

Liberals and Democrats

Our Democratic Platform

The Platform Drafting Committee has presented a draft platform to the 2008 Convention Platform Standing Committee. We can anticipate that few if any changes will be made before it is adopted at the Democratic Party Convention. The preamble is:

We come together at a defining moment in the history of our nation. America is the country that led the 20th Century, built a thriving middle class, defeated fascism and communism, and provided bountiful opportunity to many. We Democrats have a special commitment to this promise of America. We believe that each American, whatever their background or station in life, should have the chance to get a good education, to work at a good job with good wages, to raise and provide for a family, to live in safe surroundings, and to retire with dignity and security. We believe that quality and affordable health care is a basic right. We believe that each succeeding generation should have the opportunity, through hard work, service and sacrifice, to enjoy a brighter future than the last.

But today, we are at a crossroads. As we meet, we are in the sixth year of a two-front war. Our economy is struggling. Our planet is in peril.

A great nation now demands that its leaders abandon the politics of partisan division and find creative solutions to promote the common good. A people that prizes candor, accountability and fairness insists that a government for the people must level with them and champion the interests of all American families. A land of historic resourcefulness has lost its patience with elected officials who have failed to lead.

It is time for a change. We can do better.

And so, Democrats –through the most open platform process in history –are reaching out today to Republicans and Independents who hunger for a new direction and a reason to hope. Today, at a defining moment in our history, the Democratic Party resolves to renew America’s promise.

Over the past seven years, our nation's leaders have failed us. Sometimes they invited calamity, rushing us into an ill-considered war in Iraq. But other times, when calamity arrived in the form of hurricanes or financial storms, they sat back, doing too little too late, and too poorly. The list of failures of this Administration is historic.

The American Dream is at risk. Incomes are down and foreclosures are up. Millions of our fellow citizens have no health insurance while families working longer hours are pressed for time to care for their children and aging parents. Gas and home heating costs are squeezing seniors and working families alike. We are less secure and less respected in the world. After September 11, we could have built the foundation for a new American century, but instead we instigated an unnecessary war in Iraq before finishing a necessary war in Afghanistan. Careless policies, inept stewardship and the broken politics of this Administration, have taken their toll on our economy, our security and our reputation.

But even worse than the conditions we find ourselves in are the false promises that brought us here. The Republican leadership said they would keep us safe, but they overextended our military and failed to respond to new challenges. They said they would be compassionate conservatives, but they failed to rescue our citizens from the roof-tops of New Orleans, neglected our veterans, and denied health insurance to children. They promised fiscal responsibility but instead gave tax cuts to the wealthy few and squandered almost a trillion dollars in Iraq. They promised reform but allowed the oil companies to write our energy agenda and the credit card companies to write the bankruptcy rules.

These are not just policy failures. They are failures of a broken politics –a politics that rewards self- interest over the common interest and the short-term over the long-term, that puts our government at the service of the powerful. A politics that creates a state-of-the-art system for doling out favors and shuts out the voice of the American people.

So, we come together not only to replace this President and his party –and not only to offer policies that will undo the damage they have wrought. Today, we pledge a return to core moral principles like stewardship, service to others, personal responsibility, shared sacrifice and a fair shot for all –values that emanate from the integrity and optimism of our Founders and generations of Americans since. Today, we Democrats offer leaders - from the White House to the State House – worthy of this country’s trust.

We will start by renewing the American Dream for a new era -- with the same new hope and new ideas that propelled Franklin Delano Roosevelt towards the New Deal and John F. Kennedy to the New Frontier. We will provide immediate relief to working people who have lost their jobs, families who have lost their homes, and people who have lost their way. We will invest in America again –in world-class public education, in our infrastructure, and in green technology –so that our economy can generate the good, high-paying jobs of the future. We will end the outrage of unaffordable, unavailable health care, protect Social Security and help Americans save for retirement. We will return the American economy to the values that made it great—fairness and opportunity for all – and we will harness American ingenuity to free this nation from the tyranny of oil.

The Democratic Party believes that there is no more important priority than renewing American leadership on the world stage. This will require diplomatic skill as capable as our military might. Instead of refusing to confront our most pressing threats, we will use all elements of American power to keep us safe, prosperous and free. Instead of alienating our nation from the world, we will enable America – once again – to lead.

For decades, Americans have been told to act for ourselves, by ourselves, on our own. Democrats reject this recipe for division and failure. We commit to renewing our American community by recognizing that solutions to our greatest challenges can only be rooted in common ground and the strength of our civic life. The American people do not want government to solve all our problems; we know that personal responsibility, character, imagination, diligence, hard work and faith ultimately determine individual achievement. But we also know that at every turning point in our nation’s history, we have demonstrated our love of country by uniting to overcome our challenges—whether ending slavery, fighting two world war for the cause of freedom or sending a man to the moon. Today, America must unite again –to help our most vulnerable residents get back on their feet and to restore the vitality of both urban centers and family farms –because the success of each depends on the success of the other. And America must challenge us 5 again – to serve our country and to meet our responsibilities – whether in our families or local governments; our civic organizations or places of worship. We must act in the knowledge that each of us has a stake in our neighbors’ dreams and struggles, as well as our own, and recognize the dignity in each of us.

Americans have been promised change before. And too often we have been disappointed. We believe we must change not just our policies, but our politics as well. We cannot expect to keep doing the same things and expect to get different results. That is why today we come together not only to prevent a third Bush term. Today, we pledge to renew American democracy by promoting the use of new technologies to make it easier for Americans to participate in their government. We will shine a light on government spending and Washington lobbying – so that every American is empowered to be a watchdog and a whistle blower. We may not always agree, but we will work together with the respect and good will needed to move this country forward. There can be no Republican or Democratic ideas, only policies that are smart and right and fair and good for America – and those that aren’t. We will form a government as decent, candid, purposeful and compassionate as the American people themselves.

This is the essence of what it means to be a patriot: not only to declare our love of this nation, but to show it –by our deeds, our priorities and the commitments we keep.

If we choose to change, just imagine what we can do. What makes America great has never been its perfection, but the belief that it can be made better. And that people who love this country can change it.

We have a choice to make. We can choose to stay the current failed course. Or we can choose a path that builds upon the best of who and what we are, that reflects our highest values. We can have more of the last eight years, or we can rise together and create a new kind of government. The time for change has come, and America must seize it. To read the whole draft platform. For more about party platforms.

Here’s the Beef

Liberals will assemble at the Big Tent and Starz Green Room near the Democratic Convention.

Barack Obama is clearly more Liberal than John McCain, but we can still debate his Liberalism.

Democrats can win south western and Rocky Mountain states.

Besides walls between our U.S. and Europe, Obama should also reduce our walls with S. America.

After electing Barack Obama, our work must continue to reclaim our American Dream.

Michael Moore describes how Barack Obama can lose the election.

Michael Moore calls for a Barack Obama – Caroline Kennedy President – Vice President Ticket.

Democratic Leadership Council still assumes Americans are pro-war and pro-big business.

Presidential campaign nonsense.

John McCain should be attacked for his George Bush Swift Boat Economics.

Bush’s family minister has endorsed Barack Obama.

Why has Al Gore been missing in action in exposing John McCain’s anti-environmental policies?

John McCain ducks eight votes to support renewable energy.

Our Democratic platform strongly supports women’s rights.

State and Local

Smear Campaign Conducted against Jason Osgood

Jeff Upthegrove alerted me that: A smear campaign has been conducted against Jason Osgood, Democratic candidate for our Washington State Secretary of State. Originating with a staff member of his Republican opponent Sam Reed, a false rumor has been passed on by Director of King County Elections Sherril Huff and King County Council Member Dow Constantine to negatively influence Democrats who should be supporting Jason Osgood. Read Jeff Upthegrove’s blog for more details about this sordid story.

46^th LD PCO and Sergeant at Arms and Washington State Progressive Caucus Treasurer Barbara Whitt also emailed me as follows: “Have you heard about what the King County Director of Elections did to Jason Osgood. I want to do all I can to raise hell on this issue and could use some good suggestions or help.”

I want to remind everyone that electing all of our Democratic candidates for state offices is important to demolish the Republican farm team. Jason Osgood’s election to become our Secretary of State is especially important since our Secretary of State is also our states chief elections officer. Dave Thomas

Washington Primary Election Results

With over 24% of the votes yet to be counted:

All of our 6 Democratic and 3 Republican incumbent congressmembers received more votes than their rivals. All incumbents had comfortable margins, except Republican Congressman Dave Reichert (48%) vs. Democratic Darcy Burner (45%).

All of the incumbent state executive officers of both parties received more votes than their rivals. Democratic Governor Christine Gregoire (49) led Republican Dino Rossi (44%). In the contest to fill the open State Treasurer seat, Republican Allan Martin (44%) led Democratic Jim McIntire (41%), but Democratic ChangMook Sohn obtained 15%, so Jim McIntire may win in our November general election. In the closest statewide primary race, incumbent Commissioner of Public Lands Republican Doug Sutherland was in a virtual tie with challenger Democratic Peter Goldmark

If the primary results are indicative of the general election, our 2009 State legislature may contain 2/3rds Democratic Senators and 2/3rds Democratic Representatives. In the 28^th LD (Pierce County) Senate Race, Democratic Debi Srail received almost the same number of votes as Republican incumbent Mike Carrell.

In the House, all of our incumbent Democrats received more votes than their Republican Rivals; but Republicans are threatening two Democratic incumbents (Liz Loomis in LD44-2 (Snohomish County) and Roger Goodman LD45-1 (Kirkland-Redmond). Democrats received slightly fewer votes, but may win vacant formerly Republican held seats: Democratic Rob Cerqui in LD25-1 (Pierce County) and Democratic Kim Abel in LD26-1 (Kitsap & Pierce Counties). Democrats also won enough votes that they could beat incumbent Republicans: Democratic David Spring in LD5-2 (East King County), Democratic John Driscoll in LD6-2 (Clark County) and Democratic Tim Probst in LD17-1 Spokane County.

We Liberals should provide assistance to all of these Democratic candidates to ensure that they keep their positions, win vacant formerly Republican held seats and beat incumbent Republicans. We should also support our other Democratic candidates so that they might win and to force Republicans to use their resources in defense. To view our current legislators. To view primary election returns.

Endorsements for General Election Candidates

See who’s filing to run for Washington state and federal offices. Google any candidates to find their website, which may show their endorsements.

League of Women Voters explains top-2 primary

--------------------------Endorsements---------------------------------------------------------------

Washington Education Association NARAL Pro-Choice Washington

Washington Conservation Voters Sierra Club Cascade Chapter

Washington State Labor Council King County Labor Council

Washington State Democratic Party King County Democratic Party

Progressive Party of Washington Progressive Majority

Washington State Stonewall Democrats King County Bar Association

Municipal League of King County

Comparing State Income Tax Rates

Washington is one of 7 states which have no state income tax. The other 43 states all provide exemptions, with taxes only levied above the exempted amounts. Seven States have a flat income tax, which except for their exemptions are non-progressive. The remaining 36 states levy progressive income taxes, with from 2 to 10 tax brackets with increasing tax rates. Income tax rates for the lowest tax bracket range from 1 to 6%. Tax rates for the highest bracket range from 4.54 to 9.5%. For more. For more information about state taxes from the Tax Policy Center.

WashingtonCAN: Summer Leadership Conference

I attended three workshops at the NW Federation of Community Organizations Summer Conference on August 15-17 at Seattle University, with members of Montana People’s Action, Idaho Community Action, Washington Community Action Network (WashingtonCAN) and Oregon Action.

The first workshop concerned how to find, cultivate and assist legislators who will champion our values. We assist them to provide pioneering courage, raise difficult and uncomfortable issues, serve as a rallying point, mobilize public opinion. We help them by supporting their various interests, helping them to find legislative colleagues, helping to mobilize their supporters, and providing model legislation.

The second workshop concerned online organizing software. Four types of software were described:

1. Mass email software such as we use for emailing our newsletter.

2. Petitioning tool software to allow email recipients to sign petitions.

3. New member collection software to put petition signers in your organization’s member database.

4. Online donation software which allows petition signers to contribute to your organization.

The third workshop concerned opposing a Conservative ballot initiatives in order to defeat it, build a Liberal coalition concerning the issue, and strengthening our resources for future political action. Crucial is framing the initiative in Liberal terms: such as civil justice and serving public interests (instead of private interests). We would then assert our values and the ways in which the initiative would undermine them. We would take the same approach to obtaining support for any initiative that we might support.

I learned from all three workshops. Dave Thomas

Here’s the Beef

See who’s filing to run for Washington state and federal offices.

See where the action is in our state election races.

From blanket primary to pick a party primary to top two primary.

Conservative Washington Policy Center proposes a Taxation Disclosure Act. For more.

Seattle Times supports single payer health insurance coverage.

Seattle plans to double residential and commercial electricity savings.

Our cars put Seattle over the Clean Air Act smog limit.

Seattle City Council transportation committee approves parking spaces for car sharing vehicles.

Seattle grocery prices vary markedly by location and grocery chain.

Washington farm workers suffer from poor housing.

Evaluating implementation of neighborhood plans.

Neighborhood plans need to be integrated with light rail plans.

Nation and World

Our Debt Crisis

Three Crises

During this last month, we have commented on our three crises: Peak Oil (and food), Global Warming and our Housing Loan sparked Debt Crisis. This commentary will provide more detail concerning our Debt Crisis, its causes, history and solution.

Our Peak Oil Crisis is affecting us the most right now, but as higher market prices promote energy conservation, finding non-carbon based energy technologies and less consumption, we may end up better off. Our Global Warming Crisis is affecting us the least right now. But unless counter measures can be quickly identified and adopted, it will affect us the most through time. Our Debt Crisis is affecting us now and requires adopting measures counter to those which are accustomed to for the last 25 years. We must change from borrow and spend to earn and spend. See more at end of this commentary.

Our Increasing Debt

Thirty good economic years occurred following World War II. Our government had deficits. But our economy grew much faster than our government debt, rendering service our debt easier. Since 1980, slower economic growth and increased public deficits have caused increases in the ratio of our public debt to Gross Domestic Product (GDP). Our corporate debt has increased even faster than our government debt. Our household debt has increased even faster than our corporate debt. Our total credit market debt increased from 140% of GDP during the postwar period before 1984 to 335% (GDP = $13.8 trillion Debt = 44.7 trillion. ) in 2006.

In 2006, our household debt was $12.9 trillion. Our nonfinancial business debt was $9.0 trillion. Our federal government debt was 4.9 trillion. Our state and local government debt was 2.0 trillion. For a total government debt of $6.9 trillion. In addition, our financial business debt was domestic - $14.2 trillion and foreign - $1.8 trillion. The total was $44.7 trillion. If all this debt was divided among each of us 300 million Americans, each of us would owe $150,000. Our median household income is $50,000 and households typically include more than 2.6 members. To pay off their debt, our typical household would have to pay 7.8 years total income.

In 1945, U.S. corporate profits resulted over 50% from manufacturing and less than 10% from financing. This steadily reversed so that now over 40% of profits result from financial services and about 5% from manufacturing. Instead of producing things, we arrange and manage financing associated with consumption, production, saving, investment and speculation.

History of Our Debt Crisis

End of the Golden Years

The golden years following World War II came to an end in the mid-1970s. Having recovered from World War II, Japanese and European companies provided increased competition for U.S. companies. Companies could no longer raise prices and share their increased revenues with their unionized employees. Most earnings of employees stopped increasing faster than inflation. Attempting to maintain their standard of living:

1. Most women who weren’t already employed found jobs.

2. People obtained more credit cards and began to increase their credit card debt.

3. They supported lowering taxes.

Stagflation and Paul Volcker

Two oil price shocks (1973 and 1979) produced stagflation. To end our inflationary expectations, our new Federal Reserve Chairman Paul Volcker increased interest rates, creating a debt crisis among borrowing countries overseas (especially in South America and Africa) and among America’s farmers. A depression occurred in 1981-1982.

S & L Bubble

To enable Savings and Loan banks to stay in business, they were allowed to increase the interest rates they paid for money. To enable them to pay back the money, they were authorized to diversify from home loans to more risky commercial and other loans, including loans to enterprises of the owners of the banks. A Moral Hazard was created in which entrepreneurs could profit greatly, but if their enterprises failed, our government paid the losses. This created our S & L bubble which collapsed in 1989, costing our government $150 billion to pay off bankrupt S & L depositors in S & L.

Note: When the Japanese housing and stock market bubble collapsed in 1989, they refused to allow bankruptcies to enable the renewal of the banking system unencumbered by failed loans. The result was that the Japanese economy has never fully recovered.

Reaganomics

In 1981, Ronald Reagan became President. He cut progressive income taxes and increased our defense budget, producing increased government deficits and debt. Declining oil prices and Reagan’s strong fiscal stimuli produced a recovery from the Paul Volcker induced 1981-82 depression and a strong economy.

Social Security Trust Fund Hoax

As our progressive income tax rates were decreased, the regressive FICA Tax rate was increased. In 1983, our regressive FICA tax rates were increased to create a Social Security Trust fund, supposedly to ease the paying of more to retired baby boomers after they began retiring in 2010. The money in the fund was used instead to support increased government expenditures. While the taxes of our high income people were cut, the taxes of our medium and low income people often increased.

Anti-Unionization

Our Reagan administration supported companies’ abilities to resist unionization and strikes. Union membership fell. Workers earnings failed to keep pace with increases in productivity. Company profits increased. The value of stocks increased. Our capital gains tax rate had been cut in 1978. Disparities in income and wealth began increasing.

Debt Financing

Corporate interest upon debt became tax deductible. Debt financing replaced equity financing. Corporate debt soared. From 1983 to 2007, corporate debt increased from 150% to 325% of GNP. The era of junk bonds, mergers and acquisitions, hostile takeovers, and golden parachutes began. Companies were bought, stripped of their assets (including investment in new products and markets, skilled employees and employee benefits) and sold to provide tax breaks. Many productive manufacturing companies were destroyed and the careers of their employees ruined. Many high income companies paid little or no tax.

Corrupt Crony Capitalism

Deregulation and lack of enforcement of regulation occurred. Crony capitalism began to increase, with favored campaign contributors receiving tax breaks, subsidies, protection from enforcement and other benefits. More Reagan administration officials were criminally charged and convicted than had occurred since the Harding administration of the early 1920s.

Unregulated Banking

Separation of commercial and investment banking which was legislated during the 1930s New Deal was removed. In 1987, Alan Greenspan became Federal Reserve Chairman. A market fundamentalist, he opposed regulation. Commercial banks could now loan or invest their federally insured depositors’ money in a variety of risky ventures. More types and amounts of loans and investments were unregulated.

Abuses abounded: Unjustified and undocumented loans. Loans to cronies. Loans with usurious rates for less wealthy and with extra-favorable rates to cronies and political allies. Loans based on fraudulent information. Bait and switch loans. Loans with hidden features, especially low initial teaser rates which later increased markedly.

Increased Credit

Greenspan’s response to any threatened slowdown in the economy was to increase the availability of credit. He did so in anticipation of a Y2K computer crash which never occurred. He increased it again following the terrorist attack of 9/11/2001. Arguing that productivity increases created a new economy not threatened by inflation, he failed to increase regulation or margin requirements during the dot.com bubble of 1995 -99. Assuming that housing values would continue to increase, Greenspan responded the same during the housing bubble of 2002 – 2005. To delay crashes, Greenspan increased the availability of credit. These policies increased the magnitude of the bubbles and the following crashes. Unfortunately, Greenspan failed to heed former Federal Chairman William McChesney Martin’s stance that the job of the Federal Reserves “to take away the punch bowl just as the party gets going,"

Contrary to prevailing wisdom, the federal surpluses during the President Clinton’s second term were not due to his tax increases on high incomes or his restrained spending. Federal surpluses resulted from increased capital gains resulting from the dot.com bubble.

Our Housing Bubble

Our Housing Bubble of 2002-2005 resulted from various factors, including:

1. Encouraging home ownership, our Bush Administration ignored fraudulent practices. Among new mortgages, sub-prime mortgages were 20%. $2.6 trillion was loaned to people with bad credit.

2. Federal Research Chairman Alan Greenspan kept interest rates low. Discouraged from speculating in the stock market due to its decline resulting from the collapse of the dot.com bubble, people begin speculating in residential, vacation and rental homes.

3. Home owners acquired and used lines of credit based upon second mortgages on their houses. Due to these home equity loans, home equity declined markedly.

4. Unregulated nonbank lending organizations encouraged fraudulent (sub-prime and other) home purchase loan applications by employees and independent brokers. Adjustable rate loans equal or greater than 100% of house value with initial teaser rates were sold to buyers who did not have the income to repay them.

5. Lending organizations repackaged loans into various securities with different risks, but resting on a base of fraudulent information. In lieu of regulation, rating agencies (Standard and Poor’s, Fitch, and Moody’s) were supposed to monitor and rate securities; but they failed to discover problems until it was too late. These mixed and matched securities were sold to banks, pension funds, hedge funds and other customers who now don’t know their value. Derivatives (CDOS, CLOs, ABCP, CPDOs, SIVs) enabled an enormous creation of credit.

6. Investment banks granted credit both to lending organizations to make loans and to investors who bought the resulting securities. Unregulated hedge fund profits were taxed as capital gains instead of corporate income.

The result is demonstrated by the steady increase in California single-family median home prices from $175,000 in 1995 to over $550,000 in 2004. Across our country, the market value of existing houses increased by 50%. A higher proportion of people owned houses, the houses were worth more, but the owners had less equity.

Lots of financial firms and their employees made big money, much of it through fraudulent or at least risky practices. Lenders and investors became highly leveraged. Credit and debt soared.

Our Housing and Credit Bubbles Collapse

With no regulation of margins, owners, investors and speculators greatly increased their leverage (the ratio of what they owed to what they owned). Domestic financial debt as a percentage of U.S. GDP increased as follows: 1969 – 12%, 1979 – 21%, 1989 – 44%, 1999 – 82% and 2004 – 104%. Even a slight drop in ownership values or increase in interest rates exposed highly leveraged lenders and investors to bankruptcy. The inability of Lenders and investors to value their securities based upon hidden fraudulently risky loans compounded these risks. Not trusting these values, credit markets have collapsed. In response, our government is providing various support which put our revenues at risk.

As adjustable sub-prime and other mortgages have reset to higher interest rates, foreclosures have increased. With fewer loans available and foreclosed homes available, housing prices are declining. More home owners owe more than the value of their homes. 27% of all subprime mortgages are in default, as well as increasing percentages of other mortgages. Florida, Nevada, Arizona and California have suffered most, followed by Ohio, Michigan and Indiana (which are also suffering from the downturn in large vehicles due to increasing gasoline prices).

We are only halfway through our misery. Many more home mortgages will reset to cause foreclosures. 3.3 to 5 million home loans are predicted to default, with 2.2 million facing foreclosure. Home values will continue to decline. Investment firms will continue to write down their loans, face bankruptcy or be bailed out by our government. Banking losses may end up totaling $1 trillion dollars. 120,000 financial workers and 300,000 construction workers have lost their jobs. Unlike the international banking crisis of 1982, the S & L crisis of 1986, the portfolio insurance crisis of 1987, the emerging market crisis of 1997, the failure of Long Term Capital Management in 1998 and the dot.com crisis of 1999, our current credit crisis affects our entire financial system, and other foreign financial systems.

The next several years may present the biggest economic challenges to our lawmakers since the 1930s. All this will be compounded if oil prices continue to increase (as they almost certainly will). And compounded more to the extent that foreign countries switch their currency holdings away from our U.S. dollar.

We must change from borrow and spend to earn and spend.

Instead of providing demand for our economy through spending borrowed money, we must provide demand through investing in jobs which pay back the investment though increased economic efficiency and production. The workers who obtain these jobs will spend their earnings to provide demand for other products and services, thus creating more jobs. By shifting workers from providing financial services to producing other goods and services, we will benefit from what they produce.

Reducing our Credit Bubble will provide the major challenge for our Obama administration. Unless we can extricate our economy from our present stagflation, it will be almost impossible to enact health, education and other measures necessary for reclaiming our American Dream.

Obama is now listening to a variety of economists, financiers and others, some of whom are responsible for our present mess and others whose viewpoints are compatible with implementing solutions. Dave Thomas

What’s with Recent Oil Price Declines?

I am usually reluctant to predict or explain prices of stocks or commodities. Virtually no one seems able to predict them well and I have no special knowledge. But my understanding of what is causing recent declines in oil prices is:

· Predictions concerning our European economies have worsened.

· The Euro has declined in value with respect to the dollar.

· The increasing dollar value and lowered the price of oil sold for dollars.

· No storms, social unrest or predicted military action have disrupted present or expected oil production.

· Americans driving less is so far a minor factor only.

Due to peak oil production and increasing demand from Asian countries, I still expect that oil prices will increase with ups and downs, due to such factors as those listed above. Dave Thomas

Here’s the Beef

Meet one of the few economists to predict the severity of our economic crisis.

Hello stagflation. For more. For more. For more. For more. For more. For more. For more. Yuk.

Our credit crisis is going to dismantle merged mega-banks.

Oh no. Not another bubble. Meet the credit card bubble.

Tax cuts for our rich people harm our economy, by diverting money that could create demand.

Our infrastructure mess provides opportunity for needed redesign as well as jobs.

High energy costs are forcing positive lifestyle changes.

Geothermal energy production is increasing.

T. Boone Pickens wind farming proposal has benefits, but requires transmission line upgrades.

Germany pioneers materials (and related energy) conservation.

Our Food Crisis is caused by global warming and costly gasoline.

Like the polar bear, our mountain pika should be protected from global warming.

See how much U.S. land is already available for oil drilling.

To maintain our economy, workers’ pay must increase as fast as our cost of living.

More Americans are borrowing to pay health care costs. And going bankrupt.

Medical tourism is providing some competition to overpriced U.S. health care providers.

MoveOn ignores membership in supporting private health insurance.

Financially squeezed Americans reduce visits to doctors.

We need more primary care doctors, especially in rural areas and fewer specialists.

Near end of term, Bush Administration continues major assaults on environment.

Reduce, Renew and Recycle replace reading, writing and ‘rithmatic

Five policies to assist the 5% of our world’s population which is chronically poor.

Our basic freedoms are violated when we arrive at an American airport from another country.

Our states are restoring election integrity.

Our Liberal Spirit

Irrational Exuberance

In my experience, Conservatives tend to be whiny victims. Some become angry cynics. Democrats are happy warriors. But we are also prone to irrational exuberance. Allan Greenspan referred to irrational exuberance resulting from out-of-control greed. Our irrational exuberance stems instead from out-of-control dreams.

For much of my life, I was motivated by clearly impossible dreams. To be a gentleman scholar in the manner of Isaac Newton and Charles Darwin. To be a human database of information. To be the founder of a dynasty similar to the Adams, Lodges and Kennedys. To be a charming socialite. And more. Much more.

My life has been a series of passionately pursued projects, including: boy scouts, wilderness activities, U.S. travel, academic education, history, social science, philosophy, scientific methodology, community development, foreign travel, a religious movement, intimate relationships, simulation programming, native plant gardening, Native American genealogy, grassroots organizing and newsletter publishing.

Very frequently I have set my vision so high that I failed to realize it. Or I began with a more realistic vision and when I came close to realizing it, expanded it to the point that I failed. For me, the fun was in the struggle. Once the struggle neared an end, I sought to maintain it. My biography is a history of glorious struggle and failure.

Finally in my retirement, I have curbed my irrational exuberance. My two most successful projects have been my Indian genealogy which resulted in a database of 48,000 Indians and their spouses, all related by some combination of blood and marriage. And my creation of our Puget Sound Liberals newsletter. I am contented with what we are achieving. Not anxious to do much more. For me, irrational exuberance has been a way of life, but I find advantages also in a life with less irrational exuberance.

For several hundred years, one of the Indian tribes, that I researched, continually experienced bubbles and their collapse. Their leaders and members would pursue some solution to their problems. It would fail. Everyone would lose respect for their leaders. Their organization would collapse for a generation. Then new leaders would help them create a new bubble. With the same result, again and again.

Our American society has similarly experienced a series of bubbles since the 1980s. Was the exuberance that some of us experienced worth the costs that many of us have paid? It’s painful to suffer as a bystander to someone else’s irrational exuberance. It’s no fun to clean up after someone else’s party.

Many of us have inflicted our irrational exuberance upon our spouse. Or been on the receiving end. Many of our families have experienced bubbles. Something to think about. Dave Thomas

Recommended Books – See our list of books for liberals

Joseph E. Stiglitz, 2002, Globalism and Its Discontents*

Joseph Stiglitz, 2003, The Roaring Nineties, A New History of the World’s Most Prosperous Decade*

Ravi Batra, 2005, Greenspan’s Fraud, How Two Decades of His Policies Have Undermined the Global Economy

Richard Bitner, 2008, Confessions of a Subprime Lender, An Insider’s Tale of Greed, Fraud and Ignorance.

William A. Fleckenstein, 2008, Greenspan’s Bubbles, The Age of Ignorance at the Federal Reserve

Charles R. Morris, 2008, The Trillion Dollar Meltdown, Easy Money, High Rollers, and the Great Credit Crash

Paul Muolo and Mathew Padilla, 2008, Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis

Kevin Phillips, 2008, Bad Money, Reckless Finance, Failed Politics and the Global Crisis of American Capitalism.

George Soros, 2008, The New Paradigm for Financial Markets, The Credit Crisis of 2008 and What It Means

Our various bubbles and their crashes (Don’t bubbles pop instead of crashing?) have spawned an outpouring of books, especially our credit bubble. Several have focused upon Alan Greenspan’s responsibility through fueling the credit bubble with easy access to credit and refusal to regulate excesses. I prefer Kevin Phillips and Charles Morris for the big picture, Paul Muolo and Mathew Padilla for a detailed history of the development of more forms of credit and their fraudulent implementation.

Joseph E. Stiglitz debunks our conventional wisdom concerning President Clinton’s (Robert Rubin’s) economic policies. George Soros provides some insights concerning how a shrewd speculator thinks. Like everyone else, Soros has difficult predicting when markets will turn up or down. I believe that understanding the causes of our present economic mess is crucial to understanding how to clean it up. Dave Thomas

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About Puget Sound Liberals

In October, 2005, we founded our Lake Hills Liberals as an experimental demonstration of creating neighborhoods where liberals thrive and multiply and maximizing our vote for Liberal candidates. In January, 2006, we began our newsletter.

During our first year, we focused upon Lake Hills neighborhood development, experimenting with a variety of activities and events. To elect Liberals, we canvassed our 12 precincts to increase the number of identified likely Democratic voters from 33% to 90% and stimulated them to vote, which assisted election of our 2006 Democratic candidates. We recruited 30% (500) of them. We encouraged house parties to allow neighbors to meet each other to be able to prevent crime, to assist each other in a disaster, and to protect and assist our children. We created our website. We began a monthly discussion group, called the Lake Hills Liberal Salon.

During our second year, we recruited many members from throughout our Puget Sound and beyond. We changed our name to Puget Sound Liberals. Using our newsletter and website, we continued to focus upon educating our members about our Liberal values, history, priorities, policies and political strategies. We enabled Puget Sound Liberals to more easily identify, communicate, associate and cooperate with each other. Our political priority was promotion of Public Campaign Financing.

As we begin our third year, we continue our past activities, especially electing Liberals, canvassing Lake Hills, promoting house parties, educating and enabling cooperation among Liberals, and promoting Public Campaign Financing. Our new political priority is promoting a fair Washington tax system which produces enough revenue to provide all of our residents access to quality health, education and other public services. We need a progressive income tax to substitute for part of our existing excise, property and sales taxes and supplement them.

To get our free services, including our newsletter, our ‘Proud Liberal, Time for a Change’ yard signs or ‘Proud Liberal’ bumper stickers, volunteer or make a donation, contact Dave Thomas. Please help your liberal friends to become well informed, by inviting them to receive our newsletter. Just send us their name, email address, and residence (community, zip code and legislative district.)

Our weekly newsletter is currently distributed to 2300 members by email each Friday. Submit your news to Editor Dave Thomas. We are seeking reporter-reviewer-editors with knowledge of particular political groups and issues. We have asked the following experts to help us.