If you want to see Cramer, CNBC, and Santelli put into perspective, you have to watch this Jon Stewart clip.

Remember back in the election of Bush vs. Kerry, how the Bush administration said that they could not imagine how Kerry’s suggested use of diplomacy could possibly work?

Follow this link to a story in the New York Times about how the Obama administration is trying to use diplomacy to repair our relation with Russia and solve the threat of Iranian nuclear weapons.

At the time of the Bush/Kerry contest, I was upset at John Kerry for failing to point out that Bush’s ridicule was not proof that diplomacy wouldn’t work.  Instead, it was proof of Bush’s lack of imagination.

The above eleven minute video is an easy to understand explanation of the crisis of credit. Follow this link to the author’s web site for an explanation of why he made the video. It also gives you a chance to support keeping the video on the web.

I am starting to think that this economic situation is starting to get serious.  I can hear you all out there saying, “Do ya think?”

Follow this link to the video of the February 27 issue of Bill Moyers Journal.

Bill Moyers talks with economist Robert Johnson, who decodes this week’s news on the bank bailout, with a hard look at the international ramifications of the plan and a discussion of why nationalization has become a flash point.

After you listen to the pessimism, remind yourself that this interview was done before this weekend’s really bad economic news about how far down AIG is falling.

Moyers kept asking what Johnson thought the worst case scenario would be.  Despite all the apocalyptic things that Johnson said in reply, I think he was still afraid to give the real answer.

See you in the breadline.  I hope they have whole wheat.

Follow this link to the story by William K. Black, Assoc. Professor, Univ. of Missouri, Kansas City; Sr. regulator during S&L debacle. He tells how the FBI warned of an “epidemic” of mortgage fraud back in September 2004. He goes on to show that the ratings agencies like Standard and Poors were complicit in keeping the fraud hidden.  Banks that packaged these mortgages and sold them as investments did not do even a minimal amount of due diligence.  Neither the banks nor the rating agencies  even requested the documentation that would have been needed to gauge the risk of the investment.

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence.

As a novice investor, I can only say, “Live and Learn.”

Competence in the executive branch does matter.  I believe that the Obama administration has the competence, but only time will tell if I am right.  Let us hope that the voters never forget that it is nice to have a beer with a friend, but as President you want someone who is competent.

We keep hearing the story that it will take generations for our descendants to  pay off  the debt that our government is accruing to stimulate the economy.

A question has occurred to me.  At this very moment the legendary investor, Warren Buffet, is investing his money in some of the same places that our government is.  If his track record is any indication, he will become even more fabulously wealthy because of these investments.  If he wanted to leave this to his descendants, they would be taken care of for generations.

Why, then, will the same actions by our government leave the taxpayer’s descendants deeply in debt? Why aren’t we asking how Warren Buffet’s descendants are going to pay off their debt?

These are actually serious questions.  If you start thinking about answering these questions, you will learn a lot.

Republicans who claim to be masters of business, and many of them are in their private lives, know how to make money in private business, some even do it honestly.  Somehow they forget everything they know when they try to run the government.

There is another, more serious downward spiral that has the U.S. economy in its grip.

This is the downward spiral in educating people for jobs in technology, science, manufacturing, and other wealth creating industries. In the rest of this post I may just say science and technology as a shorthand to represent this whole sphere of endeavor.

I have watched this spiral over the last 40 years of my career in high tech.  In the beginning, we had the American college student body shifting away from these more productive enterprises to the more lucrative financial and legal sector.

At first there was little outward sign of trouble.  The graduate schools in science and technology were filled with bright students from abroad such as India and China.  These people filled the spaces left vacant by the American students.  The first people to notice anything at all were the people who were keeping track of the composition of the graduate school student body.  It got to the point where almost 60% of PhDs were being awarded to non-US citizens.

The vast majority of these foreign students stayed after graduate school to work in US industries and even become US citizens.  Their opportunities back home were far less than they were in the US.  Given these factors, the innovative output of the US economy kept its strength.

With the rise of the internet and the liberalization of the Asian countries, it became easier and easier for foreign nationals to find great opportunities in their own countries.  I only started to see the change in the mid to late 80s.  As great as the American draw is, if the opportunities exist at home, there are strong attractions to keep people in their own country.  These include family and cultural ties.

The self-fulfilling spiral saw more technology and manufacturing jobs being outsourced.  The financial/legal sector became a larger and larger part of the American economy. Government policy kept pumping up the financial sector and diminishing the productive sector.

Still, many foreign students kept coming to the US for its excellent colleges. Eventually we started to see a trend that rather than stay in the US to get experience, foreign countries were even attracting American born students overseas to get technical experience.

I haven’t looked at the numbers lately to see what fraction of the technical college faculty is US born.  Without even looking at these numbers it is easy to see the inevitable trend.  If the people and the experience giving jobs are migrating back to Asian countries, soon the people to educate new students will have migrated back to these countries. The US colleges will lose their attractiveness to foreign students who will find the best teachers in their own countries.

The leading US universities will start to have trouble attracting both students and faculty.

The world will no longer need us for science and technology.  It will no longer need us for education.  It will no longer need us for management of industries.  With all those needs being met at home, the other countries will soon learn that they don’t need us for finance either.

Clearly, the US will fall way behind in technological edge.  We will lose our economic dominance.  The US will lose its number one position in the world economy.

With a whole generation of techincal students and teachers lost from our economy, it is not going to be a quick matter to turn things around even if we come to our senses politically.

When this economic downturn is over, I wouldn’t bet the farm that the United States will return as strong as ever as President Obama has promised.  I don’t know if the American public is ready to hear the story of how bad our situation really is.  If they are not ready, then they are not ready to contemplate what it will take to fix the situation.  They are certainly not ready to think about how long it will take and the change of lifestyle it will require.

Make sure you understand that I am not blaming this problem on the foreign countries and their citizens.  In this game of national economics, if our competition has a better game plan than we do, it is clearly our fault for not recognizing the situation and improving our game plan.  The more our leaders tell us that we are number one and have the best workers in the world, the less likely we will be to see that we need to work smarter and harder than we have been. There is no inherent reason why we are entitled to a higher living standard than the rest of the world.  We may have a hard time adjusting to the fact that we may have to compete better just to stay even.

Follow this link to read George Lakoff’s explanation of the Obama code.

Lakoff explains about President Obama that

Speaking naturally, he lets his deepest ideas simply structure what he is saying. If you follow him, the deep ideas are communicated unconsciously and automatically.

Lakoff posits 7crucial intellectual ideas:

Behind the Obama Code are seven crucial intellectual moves that I believe are historically, practically, and cognitively appropriate, as well as politically astute. They are not all obvious, and jointly they may seem mysterious. That is why it is worth sorting them out one-by-one.

Lakoff’s idea number six, “Systemic Causation and Systemic Risk” is very insightful. It explains why the existence of this causation and risk spells doom for much of the underpinnings of the extreme conservative philosophy.  Whether they do it consciously or subconsciously, the conservatives have to defend against the idea that any possible problem might not be caused by specific individual actions that each individual is free to decide.  To admit of such a concept might mean that the free-market is not always right.

The concept of systemic causation is the underpinning of much of the ideas for improving quality manufacturing promoted by American quality guru W. Edwards Demming and first put into practice mostly by the Japanese industrialists. Systemic causation is also fundamental to human factors and safety engineering.  It is ironic that some of the same engineers whose careers are built on this concept cannot see it in action outside of the factory.

Follow this link to 22 quotes by W. Edwards Deming that might give you the flavor of the man.