So what can we do about it? The problem is apparent..lobbyists (at all levels of govt) and a media that looks at news as entertainment... so how do we correct it that won't be met with the same kind of opposition we are seeing in town hall meetings (inspired, scripted and funded by corporations and conservative think tanks)?

The solution, getting money out of politics seems simple.. its the "how" question that's so difficult.. What politician is going to promote legislation that will cut off their re-election funding and then get enough peers to sign on to get it passed? That would take a large group of politicians with a conscience in an environment that seems to be about being self serving...

One of the first things that the new Democratic majority congress could have done in 2006 would have been to get the Medicare part D plan to be allowed bulk pricing.. didn't happen though.. now Im reading that it won't either...

Maybe deficits don't matter, but it sure looks like we are heading towards bankruptcy as a nation...

So what can we do about it?

How do you spell TERM LIMITS?

What is amazing to me is that those spendthrifts in Washington DC seemingly have not woken up to the fact that a lot of folks are unemployed and a lot of businesses are closed - which means there isn't the endless supply of money flowing into their coffers from income taxes.
We will be bankrupt unless the spending stops.

This economic stimulus (aka throwing buckets of money) can't keep going on forever. So what's next, either the economy jumpstarts or we get another downleg when the money stops raining. Good luck trying to guess that one.

Kathe, the problem is money... it has turned all of our elected reps into corporate whores (with maybe an exception of a few like Kucinich and a few others)... terms limits might be one part of the solution, but taking away corporate America's personhood is a bigger part... the politicians error in favor of the corps now because they don't need a happy workforce anymore.. that was the whole intent of why benefits were offered through employers, because it was a way of attracting employees.. now that many of the corporations that provided for the middle class have left America for cheaper workforces, the politicians don't have to care about the people's needs now... in fact, I'm beginning to think they want us to fail so the corporations can gobble up the rest of our wealth... Frank Rich has an excellent article today... Have we been Punk'd? The game is rigged and the American public is finally figuring it out?
http://www.nytimes.com/2009/08/09/opinion/09rich.html?_r=1&partner=rss&emc=rss

A major reform needed to strengthen our economy is a restructuring of the financial sector that got us into this mess to begin with. Nothing gets done in this country without borrowing, and Wall Street is ground zero for those who seek other people's money to get things done. Unfortunately those who run the huge financial firms through which everything flows are treating them like casinos rather than businesses. They take huge risks for the sake of generating huge profits which lead to huge bonuses for those running the place.

The problem is that when these huge gambles don't work out, and they never do in the long term, it impacts us all because the flow of capital in the markets comes to a screeching halt. So we need to bail them out to get the money flowing again, but what have they learned? What is there in place to stop them from taking the huge risks that lead to huge financial meltdowns?

Reform must involve serious consequences for bad behavior. We need to arm our financial regulators to the teeth with real tools that will allow them to dig into the dealings of these firms so the infections can be diagnosed before they become systemic. When these shysters get caught they need to get labeled as felons and thrown out of the club for good, not bailed out and sent back into the mix to do it all over again. The fact that an outright thief like Bernie Madoff could operate for years on end virtually unabated tells us that our financial regulatory mechanisms are severely out of whack. We can't afford that.

Frankly, I don't see a huge problem with American "industry" per se as much as a problem with those that finance it. Of course Wall Street is all about the numbers, and industrial executives make short sighted decisions to boost numbers to impress the street so share prices go up and they get bonuses. Smart investors see through such short term manipulation and ultimately punish poorly managed firms by taking their money elsewhere. One sure sign of a company ripe to be run into the ground is one that rewards executives heavily based on share prices rather than earnings.

I also agree with the comment above about getting lobbyists and their filthy dollars out of halls of government. They should be treated as bribe makers and the law makers as bribe takers. Campaign finance reform goes to the heart of our system and the way things are and always have been that it's hard for me to believe that anything meaningful will be done about it in my lifetime.

At least one positive effect of the short term government spending is that it tends to benefit those from the middle of the economic spectrum for a change. The argument goes that if you cause more cars/houses to be sold more cars/houses will be built and that will create jobs. Time will only tell if this spending creates jobs or just clears out a bunch of inventory that has been collecting dust for the last year or so. I for one would like to see more money going towards job training and education so our workforce is better prepared to adapt and compete in a global economy that rewards those who can shift to meet rapidly changing demand in the marketplace.

Here's a great discussion of the short-term vs. long-term impacts of stimulus and where we go now:
http://www.whyy.org/podcast/072809_100630.mp3

I've read we are still about to face another loan default crisis - not subprimes, but Alt-A and Option Arm loans. Alt-A loans were given based on credit score with no documentation of income, etc... Option Arm loans are the ones that start low even at 1% but later reset. That reset is coming up. Together these 2 types of loans could cause more problems than the subprime disaster.
How do we respond? By throwing 23 trillion more in guarantees to get this new batch of toxic assets out of the firms that created them?

Are we approaching the breaking point?

Demand for treasury auctions has been touted as robust. But it turns out a giant chunk of notes - basically a few days worth - was recently purchased by a 3rd group before being bought back up by the Fed a few days later.
47% of the notes we sold the world in this little stretch that someone analyzed, were actually the Fed buying them because the world wasn't interested in Brand America.

The Fed is desperately trying to make it appear that our debt is still an attractive buy, but how can it be? And what will happen when a batch of treasury notes is auctioned off and nobody steps forward?

Plus, the 3rd party in the deception gets to pump profits from the deal back into Wall Street, so the Fed is in effect, artificially manipulating the recent rebound on Wall Street that has lent to such stories of optimism.

Now for the bad news. (Sorry that was gallows humor.)

It has been suggested in the articles I see about the economy, that some rosy reports from companies are based on Mark-to-Model which is a relatively new way of describing your assets that is not tied to the actual market price. It's a way to misrepresent how your company is really doing.

The repayment of TARP funds is sold to us as a sign of prudent investment bankers gratefully repaying the American People, even though we're still on the hook for the trillions in toxic assets.

But what these articles say - when the authors aren't just screaming - is that the TARP repayments and the rosy reports are only happening because the executives want to return to their ridiculous bonuses and they're more free to do so without TARP money and government supervision.

Meanwhile, they are fighting like hell to continue doing what got us into the crisis, and even to expand their abilities with front-running computer deals by Goldman Sachs, and more power for the Fed to "supervise" the financial sector.

Plus they're now operating with the feeling that if they screw up, we'll bail them out.
Rather than pay for their greed, they profited off the bailout. For them it was a good thing.

Meanwhile, the whole hideous mass of unwise loans was just made so a few thousand people could get a sales commission and big bonuses at the end of the year. We could have just paid them 10 times what they made in exchange for doing nothing, and we would be trillions and trillions better off.

Other than that though, the recovery is going great.

Nice David Sirota piece on the me-first, screw-everyone-else types running the show these days:

http://www.salon.com/opinion/feature/2009/08/08/sirota_selfish/index.html

Bill McDonald should be declared a national treasure. In one comment, he throws out a one-liner that makes me chuckle all day. Then, the next comment puts Paul Krugman to shame.

Wall Street is only to blame to the extent you participate in it.

A modest proposal: stop using consumer credit. period. stop participating in the stock market. period.

consumer credit is the one of the nose-rings by which we're lead around. it's enabled the economy to be artifically pumped up beyond recognition, created a middle class that couldn't really exist without it, and created a class of working poor that will remain forever trapped in a cycle of debt. the system is so utterly slanted towards the powerful that it's stunning when people are surprised. why do they think this stuff exists--to *help* them?

and the stock market? sorry folks--over 92% of all stock market "wealth" is in the control of just a few people and organizations. the rest is you "investing" in scams like 401(k)s that are always--always--two steps from utter disaster. when that disaster comes, start blaming yourself first.

want to experience change you can believe in? start opting out of the system that was created to make a handful wealthy. stopp relying on the government to "create wealth" and "provide jobs". do for yourself and your community. government helping people get and remain healthy? fine. government being blamed for people placing their lives in the mouths of lions and whining about getting bitten? ridiculous.

UsualKevin, a little reform is needed as you suggest, but for me reform can happen with allowing failure. That is reform, and it costs so little. There are entities that will gobble up those that fail. They have prudence and can take advantage of those that don't practice common sense economics.

We don't need so much government intervention that is now skewing our businesses and economy.

Does anybody believe the "one world government" conspiracy theories that are supposedly heading our way much like a runaway train?

According to them soon we will all be part of Amerimexinada using the Amero as currency?

That would make life sorta interesting wouldn't it?

Garage Wine,
Thanks for the kind words. I showed your comment to my wife and she said, "What nation is that?" Ouch.

When massive government intervention disrupts markets and freedom of choice and destroys value, we as individuals can't do much about it, even though the intervention with few exceptions ultimately is doomed.

But one thing we can do is bet financially against the government. An effective way to do that is to short treasury bonds, as part of our balanced portfolios. Individual investors can do that through at least two ETF's, PST for intermediate term bonds and TBT (20 year on up bonds). Been a good investment for me this year, though not quite as good as shorting banks (SKF), real estate (SRS) and China (FXP) was last year.

Since I can't win the policy fight against all the smart people and collectivists who currently are in control, I figure the responsible thing I can do is make bucks to take care of my family. Would love to return to a world where investing long across the board was good.

And by the way, I really appreciate the cash for clunkers program. My 1997 Ford Taurus (a non-clunker) is dying on me as I write, but I can't get a decent deal anywhere now due to inventories being driven down by the clunker program. Let's hear it for the government interfering with ordinary people making ordinary and responsible decisions on their own behalf.