This is not meant as a snipe; because I like some of your diaries (not saying I agree...just like). I have a small history here, but I am no political activist by any means; and my contribution is going to be elsewhere. If you care to dig through my record here, you will find that I have been fairly sceptical of Obama.. but I still would like to see him succeed (I said the same of Bush, btw). I can rant on and on about Wall street vis a vis manufactring jobs; but I dont have the time and Charles Lemos is a much better writer and so I enjoy readign his rants on the topic.
Given all that, I am curious as to what your background is. You have a "lets blow it up and start over" attitude; which is similar to mine (except I would blow up a different set of things); and I would like to know where it is coming from.
There have been several instances in history, when a cunning leader will orchestrate a situation wherein an enemy with superior forces is manipulated into a situation where it fights against itself.
I just got done reading up on the history of the Holy Roman Empire (the Byzantines), after the fall of Rome. They survived on that principle for over 1000 years, against all odds. And all the time, as I was reading it, I could not help but think of Afghanistan.
That article on health care spending is naive. It looks at the problem with a very crude level of granularization. You cannot breakdown a $2.4B industry into 5 substantially overlapping segments, and expect to learn much the excersise.
A better way to break the problem down is into individual diseases and outcomes. So much on osteoporosis, so much on bacterimia, so much on cancer etc. And then compare the amount spent on each segment, with the results and the results obtained in other coutnries, and with the results that could be obtained if we had a slightly different model. For instance, we spend $10B treating fractures due to osteoporosis, and $40B on patients who acquire nosocomial (hospital aquired infections). Can we reduce the expenditure on osteoporosis to $5B, if we could spend $1B on prevention. Answer is no, because we don't know how to identify the "at risk" population with sufficient accuracy. Is it worthwhile to spend $10B, compared to the results ? Yes...because the pain/suffering is horrendous. Can we save money there ? Yes...the money being spent on prevention is largely being wasted. Likewise for nosocomials.... can we reduce the nosocomial spending to $20B, if we spend $1B in prevention (answer is yes...but it's complicated).
But I think he has missed the point here. His point (or one of his points) is that the govt. deliberately fed the credit bubble beast as a matter of social policy. He argues that this was done, in part to assuage the growing income disparity between rich and poor. In other places, he has (and others have as well) argued that Fannie and Freddie were the ones that did this lending.
This is not true. First of all, most of the lending done to the poor was done by perfectly capitalistic banks, while ignoring govt. regulations (such as documentation on individual loans, and overall leveraging etc.) that should have prevented them from doing so. The share of bad loans made by Fannie and Freddie was relatively small, and was made late in the game. Second, most of the bad loans were not "sub-prime"; a good chunk wre made to people with perfect credit.
Thirdly, and most importantly, I would very much doubt that any government could deliberately set out to create such havoc in such a manner. Indeed, I would be very afraid if any govt. could have such power. Historically speaking, governments have had very little understanding of economics, and consequently have had little success in creating an economic impact that they have directly desired. The Roman Diocletian, for instance, minted lots of coins when he needed money to expand his army...not realizing that this would create inflation. Even in recent times, you have perfectly good, intelligent people, who ramble on complete blather about laffer curves and perpetual motion machines. Given this general incompetence, it would be well near impossible for anyone to have deliberately set out to create our current crisis, adn to then have achieved it.
It is true that inequalities have risen. But there is a simpler explanation for it...inequalities rise when the masses do not pay attention (or when they can be distracted by nice shiny objects...such as gladiators in a circus, or on a color TV). Inequalities continue to rise, up until the masses can take it no longer. At that point, the inequalities fall either because there is a wise leader in charge who seeks to redistribute some wealth, or because there is a revolution adn the rich lose more than the poor.
There is a very fundamental dynamic at play here...money creates money. So, if you have money, you will generally dominate the wealth creation process. The exceptions to that rule have been due to possessions of guns (prime example: the Mongol Hulagu locking the last Caliph of Baghdad in his treasury, so that the Caliph could starve amongst his gold), or some other very outstanding talent. If money did not create money, then we would all be rich. This is why inequalities rise. History has played out that way ever since money was first minted, and it will probably play out that way for a good deal longer.