By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — Kaboom. David Stockman attacks America with Critical Warning No. 13. But the guy’s biggest problem is not his angry rhetoric. Stockman’s problem is he’s a truth-teller. Rare today. And not in denial.
Yes, he’s a truth-teller. And truth hurts, flushing out his enemies. Why? They’re sucking trillions from Americans. So you hate him. Counterattack. Big mistake. Don’t dismiss David Stockman. He’s no Kim Jong-Un blow-hard.
Stockman’s a patriot assuaging his conscience for having been a major weapon in the early launch days of Ronald Reagan’s “disaster capitalism” a generation ago. Today, even though Stockman says “the future is bleak,” at least he offers an eight-point plan to correct the “policies that have brought America to an end-stage metastasis,” while hedging his bet: It’s so “way out, so radical it can’t happen.” Yes, its DOA.
That’s also why Stockman is being attacked as a new “Dr. Doom” by celebrities like Nobel economist Paul Krugman. Still, you need a little background to see why Stockman’s new book, “The Great Deformation: The Corruption of Capitalism in America” is Critical Warning No. 13, as Wall Street pushes us ahead into the fifth year of an aging bull market, a fatal fifth year.
And why America’s 95 million investors will soon be losing big in the 21st century’s third mega market crash, another recession and $10 trillion more losses thanks again to Wall Street’s too-greedy-to-fail banks.
Reaganomics, Friedman’s ‘Shock Doctrine’ and ‘Disaster Capitalism’
Stockman’s aggressive attack makes it painfully clear that the Reaganomics exposed in Naomi Klein’s “Shock Doctrine: The Rise of Disaster Capitalism” has replaced democracy in America ... that Reaganomics “disaster capitalism” is now more powerful than when he helped launch the doctrine a generation ago ... that its inequities are undermining the American Dream ... that the takeover of government by the not-so-secret conspiracy of Wall Street, corporations and the Super Rich has metastasized ... that the conservative dogma of Nobel economist Milton Friedman and its high priestess Ayn Rand, of Fed dictators Alan Greenspan and Ben Bernanke, of budget hawk Paul Ryan and his Tea Party mercenaries is now imbedded in American politics, on the left as well as right, deep in our DNA and our souls.
When we reviewed Klein’s “Shock Doctrine” in 2007 it was clear that the “disaster capitalism” of Reaganomics was “the core of an emerging new world order that generates profits by feeding off other people’s misery: Wars, terror attacks, natural catastrophes, poverty, trade sanctions, market crashes.”
True, Reagan was the commander leading the charge. But Friedman was the mastermind preaching that “economic change never occurs without a crisis shocking the system,” whether a natural disaster or one invented like the “mushroom cloud” fears that launched the Iraq War.
Disaster capitalism is a dark, negative doom-and-gloom ideology, secretive and paranoid, with little respect for human life except as a tool for making money.
Critical Warning No. 13: Both the right and left are destroying America
“The future is bleak” admits Stockman in predicting the end game of today’s corrupt capitalism. Before we analyze his eight-point solution to correct the “policies have brought America to an end-stage metastasis,” you need a little more background.
Back in 2010 Stockman wrote an earlier New York Times op-ed piece, the“Four Deformations of the Apocalypse.” His opening was a brutal indictment: “How my GOP destroyed the U.S. economy.” Notice, he did not say “destroying.” Stockman said the GOP had already “destroyed” the U.S. economy, setting up an economic apocalypse: “If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing.”
We covered yet another Stockman commando raid in a 2011 Reason magazine interview with editor-in-chief Nick Gillespie. He loves the fight. The focus was on Stockman’s 1986 best-seller: “The Triumph of Politics Over Economics.” An admission that economics was not only a dismal profession, it was dead, a pawn for special interests and politicians.
It was also clear an older, wiser and more reflective Stockman was now focusing on “the paradigm shift that’s destroying America from within.” We are “at a crossroads. Politicians had become the new economists. Politicians, their big-money backers and lobbyists ruled the American economy like banana-republic dictators. The old capitalist economics that made America the world’s greatest superpower no longer exists.”
Critical Warning No. 13: Stockman attacked as over-the-top ‘Dr. Doom’
The future is not encouraging. Stockman’s doomsday scenario exposed “professional economists as no more than hired guns for politicians with myopic ideologies and huge bankrolls that make it easy to justify lying, cheating and stealing from investors, workers, consumers, savers and taxpayers. Capitalism has morphed into a monopoly ruled by politicians who are serving a wealthy elite. Competition was a joke.”
That was two years ago: Even then Stockman knew his message wasn’t stopping the “GOP from destroying the U.S. economy.” Nor stopping Obama, the Dems and Bernanke. As Shakespeare once said, we all have our entrances and exits, stage left and right. All part of a larger historical cycle setting America up for a “disaster capitalism” crisis destined to trigger a new crash bigger than the 2000 dot-com crash and 2008 mortgage meltdown combined, one that will outshine 1929 and the Great Depression, especially when global political, warfare and macroeconomic conflicts factor into the equation.
In short, this grand bubble has been building for 32 years, the generation since Stockman became a leader in the Reaganomics drama that’s more alive today, growing more powerful and the incentive driving Stockman to expose and to stop the inevitable.
Critical Warning No. 13: Eight solutions won’t stop inevitable Apocalypse
Stockman is the new “Dr. Doom.” Why? Because he is a truth-teller who ranks right up there with America’s best-of-the-best Dr. Dooms: “Black Swan’s” Nicholas Nassim Taleb, Nouriel Roubini, Hong Kong’s famed Marc Faber, GMO’s Jeremy Grantham, Nobelist Joseph Stiglitz, Harvard’s Niall Ferguson, and of course the duo behind the greatest book on economic cycles of all time, “This Time is Different: Eight Centuries of Financial Folly.”
Yes, Stockman condemns America, “the future is bleak.” He warns of a “state-wreck ahead,” of a coming “Apocalypse,” of the “Great Deformation” consuming America “arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices.”
So “what must be done?” Stockman offers America an eight-point plan to stop the apocalyptic ending “to an end-stage metastasis.” But he admits, this “way out would be so radical it can’t happen.” Get it: Can’t happen. Inevitable. Game over.
So scan the eight, you’ll understand why nothing will happen voluntarily, why Wall Street and its addictive conspirators must play out this drama because this time has never been different in the last 800 years of economic folly, crash after crash, recession after recession. Human nature, greed and politicians never change.
Here are the eight solutions that “can’t happen:”
- Stop all government subsidies of capitalism: “a sweeping divorce of the state and the market economy” ending “crony capitalism.”
- Eliminate incumbency: A “sweeping constitutional surgery” with “amendments to give the president and members of Congress a single six-year term, with no re-election.”
- No more elected officials as lobbyists: “Prohibiting, for life, lobbying by anyone who has been on a legislative or executive payroll.”
- Overturn Citizens United: End the fiction that corporations are humans.
- Balanced budgets: “Mandate that Congress must pass a balanced budget.”
- Close all Wall Street derivatives casinos ... Purge “corrosive financialization that has turned the economy into a giant casino since the 1970s.” No cheap Fed loans, no bailouts, no deposit insurance.” Reenact the Glass-Steagall.
- Stop Fed micromanaging the economy: No more cheap money. No debt buybacks. No investing in private companies. Fire the Fed’s central planners. Restore “The Fed’s original mission: to provide liquidity in times of crisis but never to buy government debt or try to micromanage the economy. Getting the Fed out of the financial markets is the only way to put free markets and genuine wealth creation back into capitalism.”
But sadly, Stockman the truth-teller is clear, these grand solutions “can’t happen,” at least till after the next big crash. Why? Because the American government is run by a secret conspiracy of Wall Street, Corporate America and the Super Rich that’s in denial.
So until the coming Apocalypse, this is Stockman’s Critical Warning No. 13: But “when the latest bubble pops, there will be nothing to stop the collapse.”
So here’s his eighth and final solution, a personal one for you: “If this sounds like advice to get out of the markets and hide out in cash, it is.”