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July 31, 2008 at 15:53:38
Getting to the Bottom of the US Economic Woes by Kitty Antonik Wakfer Page 1 of 1 page(s) |
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Unless sufficient numbers of people come to realize the true situation in the US very soon, the economic distortions that have been taking place with increasing rate and amplitude since the 1910s will bring the chickens home to roost with a crash strong enough to flatten the hen house.
A review of fascism is warranted at this point to give my statement above more meaning for those weak in economic/political history. From As We Go Marching, part 1, chapter 10 by John T Flynn originally written in 1944:As we survey the whole scene in Italy, therefore, we may now name all the essential ingredients of fascism. It is a form of social organization
1. In which the government acknowledges no restraint upon its powers - totalitarianism
2. In which this unrestrained government is managed by a dictator - the leadership principle
3. In which the government is organized to operate the capitalist system and enable it to function ? under an immense bureaucracy
4. In which the economic society is organized on the syndicalist model, that is by producing groups formed into craft and professional categories under supervision of the state
5. In which the government and the syndicalist organizations operate the capitalist society on the planned, autarchical principle
6. In which the government holds itself responsible to provide the nation with adequate purchasing power by public spending and borrowing
7. In which militarism is used as a conscious mechanism of government spending, and
8. In which imperialism is included as a policy inevitably flowing from militarism as well as other elements of fascism.
Wherever you find a nation using all of these devices you will know that this is a fascist nation. In proportion as any nation uses most of them you may assume it is tending in the direction of fascism.
A review of the above in conjunction with the current economic and political situation in the US, will lead any reasoning reader to the conclusion that the US is very definitely "tending in the direction of fascism", and to a high degree of "tending". Similar conclusions, varying only in degree of "tending", will be reached from an objective study of many other countries, with the remainder tending more toward socialism - production owned by the State directly, with all citizens being employees.
The failure of so many to recognize (on their own, without seeing the list above) that this ever more closely encroaching fascism underlies current economic problems is largely because capitalism has never been fully practiced nor understood (except by a very few), even in the US - "the home of the free and the land of the brave". It has always been adulterated by government involvement - to a relatively small extent at the beginning of the US but increasingly so at the federal level since the days of Abraham Lincoln as President with his promotion of the National Bank Act and National Currency Act in 1863 (mainly in order to create an active secondary market for US Treasury securities to help finance the Civil War). The trend toward fascism continued and even picked up considerable speed with the Federal Reserve Act in 1913, the same year federal income taxes on individuals and corportations began, and hasn't diminished acceleration one bit through the Square Deal, the New Freedom, the New Era, the New Deal, the Fair Deal, the New Frontier, the Great Society and more recently the Homeland Security Act (2002) as part of the War on Terror - all during the 95 years since the Federal Reserve was born.
The federal, state and even local governments have many dozens of agencies that regulate all the enormous number of different areas and ways in which residents in and visitors to the US interact. All of these have costs - to run these enormous bureaucracies, paid for by taxes on residents and visitors, and fees from the companies and individuals being regulated. Since the fees and taxes charged to companies, along with the costs of meeting all government requirements, also become part of the costs that go into the price of their products and services, whether purchased directly by some individual or another company, ultimately, all government income is a direct loss of value by individual consumers.
Those who have never owned their own business, or been closely associated with the management of one, generally have little understanding of the enormity of government presence in whatever service or product they are attempting to value exchange with someone else. There are forms to fill out and submit before one can even get started in the smallest of businesses, and it never stops. The amount of government-required paperwork mushrooms the larger one's operation and/or with many types of businesses. And with the loss of time spent on that paperwork goes increasing amounts of money required to be sent to the various levels of government - for permission to offer particular services and/or products, among the ones that government even allows. It doesn't take too much imagination to realize that the amount of accounting and legal costs alone for a company of any size would decrease enormously if government regulation disappeared. However, some company owners/managers from the earliest days of the US (and later, also some employee associations/unions) have found that currying favor with politicians can create a special status for their organizations - even to the extent of eliminating the presence of competitors. And of course since politicians and bureaucrats have the legalized force of the government behind them, their decisions/edicts/regulations all include the threat of fines, imprisonment, confiscation or even death - if one resists the government authorized (and legally protected) enforcers.
In a free market - laissez-faire capitalism - people act in their own individual interests, either setting up and operating their own businesses by themselves or in voluntary association with others, or they sell their labor/skills/knowledge to those who own the companies; there is no government regulation of what and to/with/for whom and at what price any of this is done. One is self-responsible in a free-market - to succeed or fail - and interacts only with those whom one has chosen to do so. The company owner provides the tools, buildings and upfront cash (the capital - thus "capitalism") to get the business going and arrange for its continuance through management. S/he may do all this by hirself in addition to providing the service and/or products that s/he offers for sale to others - OR s/he may pay one or more others to do some of the tasks that are related to the numerous aspects of the business. The greater amount of service and/or product that the owner can produce that others are willing to purchase, the greater the likelihood that s/he will have employees, those who have decided to sell their labor (physical labor/skills/knowledge) to this particular business owner - and not some other, and instead of being self-employed. And also the more total value of exchange to mutual benefit will such a company generate, of which a part will become well-deserved profit for the owner.
A buyer in one transaction in a free market is also a seller in other transactions - and each individual involved is exchanging to hir own mutual benefit, with the end goal of maximizing hir lifetime happiness, the purpose of each person's life whether or not s/he recognizes that fact. The presence of government in these exchanges is like sand in a finely tuned machine, despite the claims by so many that the market must be "regulated" or it will run amok. It is the government's interference and it's never ending band-aids applied to fix problems that were created in a previous administration (or even the same) that has resulted in all the distortions, both upward and downward. Those who think that "[c]apitalism is designed to crash and transfer most of the money in the markets to a few hands", do not understand capitalism, since a free market is not "designed" at all, but simply comes about as a result of voluntary interactions. The "crashes" with their extensive loss of money by some, directly (and many indirectly) - as well as enormous surges - are as a result of the distortions created by government manipulation both of money (modern value exchange) via federal/central banking (effectively an arm of modern governments by legalized monopoly, or a direct department of those governments) and of markets, by pump priming, debt encouragement, bail-outs, etc.
Growth is the natural trend of a free market, since both populations and accumulation of wealth per capita generally increase with time, but humans are not omniscient and therefore some decisions will later be found to be unprofitable - the entrepreneur loses hir capital and/or the investor hir money. However, when the interactions between individuals are based on the judgment of each as to what is in hir own best interest, each will acknowledge responsibility, learn from hir error and the resulting corrections will be far less reaching and harmful to all than when numerous factors are at the whim of government at any one or more levels, in any one or more agencies, under any one or more administrations with any one or more particular bureaucrats. Despite what those managing companies or merely employed by such managers think, governments are not a necessity for the existence of an orderly society - one where physical harm is the rarity and, in such an occurrence, restitution is used to rectify the harm and social preferencing is used to strongly promote both the completion of restitution and the prevention of similar future actions.
So, to one writer's inferred question of whether the economic woes, seen now and/or in the past in the US (and elsewhere too), are a natural result of capitalism, the answer is "No". Those woes have occurred as a result of the government - an enormous Medussa with its thousands of tentacles that have transformed a mostly capitalistic system in this country's infancy into a system that is tending increasingly toward fascism, particularly accelerating during the past near 100 years. Fascism is what we are on the brink of now in the US; the kernal of capitalism is hardly recognizable at all by those who know what it really is.
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Highly recommended reading for everyone is a small and very readable but highly informative book that has never been out of print since its first publication in the mid 1940's - Economics in One Lesson by Henry Hazlitt. H.L. Mencken called Hazlitt "one of the few economists in human history who could really write." Nobel Laureate F.A. Hayek hailed this book as "a brilliant performance."
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They Thought They Were Free
They Thought They Were Free The Germans, 1933-45 By Milton Mayer But Then It Was Too Late “What no one seemed to notice,” said a colleague of mine, a philologist, “was the ever widening gap, after 1933, between the government and the people. Just think how very wide this gap was to begin with, here in Germany. And it became always wider. You know, it doesn’t make people close to their government to be told that this is a people’s government, a true democracy, or to be enrolled in civilian defense, or even to vote. All this has little, really nothing, to do with knowing one is governing. “What happened here was the gradual habituation of the people, little by little, to being governed by surprise; to receiving decisions deliberated in secret; to believing that the situation was so complicated that the government had to act on information which the people could not understand, or so dangerous that, even if the people could understand it, it could not be released because of national security. And their sense of identification with Hitler, their trust in him, made it easier to widen this gap and reassured those who would otherwise have worried about it. “This separation of government from people, this widening of the gap, took place so gradually and so insensibly, each step disguised (perhaps not even intentionally) as a temporary emergency measure or associated with true patriotic allegiance or with real social purposes. And all the crises and reforms (real reforms, too) so occupied the people that they did not see the slow motion underneath, of the whole process of government growing remoter and remoter. “You will understand me when I say that my Middle High German was my life. It was all I cared about. I was a scholar, a specialist. Then, suddenly, I was plunged into all the new activity, as the university was drawn into the new situation; meetings, conferences, interviews, ceremonies, and, above all, papers to be filled out, reports, bibliographies, lists, questionnaires. And on top of that were the demands in the community, the things in which one had to, was ‘expected to’ participate that had not been there or had not been important before. It was all rigmarole, of course, but it consumed all one’s energies, coming on top of the work one really wanted to do. You can see how easy it was, then, not to think about fundamental things. One had no time.” “Those,” I said, “are the words of my friend the baker. ‘One had no time to think. There was so much going on.’” “Your friend the baker was right,” said my colleague. “The dictatorship, and the whole process of its coming into being, was above all diverting. It provided an excuse not to think for people who did not want to think anyway. I do not speak of your ‘little men,’ your baker and so on; I speak of my colleagues and myself, learned men, mind you. Most of us did not want to think about fundamental things and never had. There was no need to. Nazism gave us some dreadful, fundamental things to think about—we were decent people—and kept us so busy with continuous changes and ‘crises’ and so fascinated, yes, fascinated, by the machinations of the ‘national enemies,’ without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us. Unconsciously, I suppose, we were grateful. Who wants to think? “To live in this process is absolutely not to be able to notice it—please try to believe me—unless one has a much greater degree of political awareness, acuity, than most of us had ever had occasion to develop. Each step was so small, so inconsequential, so well explained or, on occasion, ‘regretted,’ that, unless one were detached from the whole process from the beginning, unless one understood what the whole thing was in principle, what all these ‘little measures’ that no ‘patriotic German’ could resent must some day lead to, one no more saw it developing from day to day than a farmer in his field sees the corn growing. One day it is over his head. “How is this to be avoided, among ordinary men, even highly educated ordinary men? Frankly, I do not know. I do not see, even now. Many, many times since it all happened I have pondered that pair of great maxims, Principiis obsta and Finem respice—‘Resist the beginnings’ and ‘Consider the end.’ But one must foresee the end in order to resist, or even see, the beginnings. One must foresee the end clearly and certainly and how is this to be done, by ordinary men or even by extraordinary men? Things might have turned out differently. And everyone counts on that might. “Your ‘little men,’ your Nazi friends, were not against National Socialism in principle. Men like me, who were, are the greater offenders, not because we knew better (that would be too much to say) but because we sensed better. Pastor Niemöller spoke for the thousands and thousands of men like me when he spoke (too modestly of himself) and said that, when the Nazis attacked the Communists, he was a little uneasy, but, after all, he was not a Communist, and so he did nothing; and then they attacked the Socialists, and he was a little uneasier, but, still, he was not a Socialist, and he did nothing; and then the schools, the press, the Jews, and so on, and he was always uneasier, but still he did nothing. And then they attacked the Church, and he was a Churchman, and he did something—but then it was too late.” “Yes,” I said. “You see,” my colleague went on, “one doesn’t see exactly where or how to move. Believe me, this is true. Each act, each occasion, is worse than the last, but only a little worse. You wait for the next and the next. You wait for one great shocking occasion, thinking that others, when such a shock comes, will join with you in resisting somehow. You don’t want to act, or even talk, alone; you don’t want to ‘go out of your way to make trouble.’ Why not?—Well, you are not in the habit of doing it. And it is not just fear, fear of standing alone, that restrains you; it is also genuine uncertainty. “Uncertainty is a very important factor, and, instead of decreasing as time goes on, it grows. Outside, in the streets, in the general community, ‘everyone’ is happy. One hears no protest, and certainly sees none. You know, in France or Italy there would be slogans against the government painted on walls and fences; in Germany, outside the great cities, perhaps, there is not even this. In the university community, in your own community, you speak privately to your colleagues, some of whom certainly feel as you do; but what do they say? They say, ‘It’s not so bad’ or ‘You’re seeing things’ or ‘You’re an alarmist.’ “And you are an alarmist. You are saying that this must lead to this, and you can’t prove it. These are the beginnings, yes; but how do you know for sure when you don’t know the end, and how do you know, or even surmise, the end? On the one hand, your enemies, the law, the regime, the Party, intimidate you. On the other, your colleagues pooh-pooh you as pessimistic or even neurotic. You are left with your close friends, who are, naturally, people who have always thought as you have. “But your friends are fewer now. Some have drifted off somewhere or submerged themselves in their work. You no longer see as many as you did at meetings or gatherings. Informal groups become smaller; attendance drops off in little organizations, and the organizations themselves wither. Now, in small gatherings of your oldest friends, you feel that you are talking to yourselves, that you are isolated from the reality of things. This weakens your confidence still further and serves as a further deterrent to—to what? It is clearer all the time that, if you are going to do anything, you must make an occasion to do it, and then you are obviously a troublemaker. So you wait, and you wait. “But the one great shocking occasion, when tens or hundreds or thousands will join with you, never comes. That’s the difficulty. If the last and worst act of the whole regime had come immediately after the first and smallest, thousands, yes, millions would have been sufficiently shocked—if, let us say, the gassing of the Jews in ’43 had come immediately after the ‘German Firm’ stickers on the windows of non-Jewish shops in ’33. But of course this isn’t the way it happens. In between come all the hundreds of little steps, some of them imperceptible, each of them preparing you not to be shocked by the next. Step C is not so much worse than Step B, and, if you did not make a stand at Step B, why should you at Step C? And so on to Step D. “And one day, too late, your principles, if you were ever sensible of them, all rush in upon you. The burden of self-deception has grown too heavy, and some minor incident, in my case my little boy, hardly more than a baby, saying ‘Jewish swine,’ collapses it all at once, and you see that everything, everything, has changed and changed completely under your nose. The world you live in—your nation, your people—is not the world you were born in at all. The forms are all there, all untouched, all reassuring, the houses, the shops, the jobs, the mealtimes, the visits, the concerts, the cinema, the holidays. But the spirit, which you never noticed because you made the lifelong mistake of identifying it with the forms, is changed. Now you live in a world of hate and fear, and the people who hate and fear do not even know it themselves; when everyone is transformed, no one is transformed. Now you live in a system which rules without responsibility even to God. The system itself could not have intended this in the beginning, but in order to sustain itself it was compelled to go all the way. “You have gone almost all the way yourself. Life is a continuing process, a flow, not a succession of acts and events at all. It has flowed to a new level, carrying you with it, without any effort on your part. On this new level you live, you have been living more comfortably every day, with new morals, new principles. You have accepted things you would not have accepted five years ago, a year ago, things that your father, even in Germany, could not have imagined. “Suddenly it all comes down, all at once. You see what you are, what you have done, or, more accurately, what you haven’t done (for that was all that was required of most of us: that we do nothing). You remember those early meetings of your department in the university when, if one had stood, others would have stood, perhaps, but no one stood. A small matter, a matter of hiring this man or that, and you hired this one rather than that. You remember everything now, and your heart breaks. Too late. You are compromised beyond repair. “What then? You must then shoot yourself. A few did. Or ‘adjust’ your principles. Many tried, and some, I suppose, succeeded; not I, however. Or learn to live the rest of your life with your shame. This last is the nearest there is, under the circumstances, to heroism: shame. Many Germans became this poor kind of hero, many more, I think, than the world knows or cares to know.” I said nothing. I thought of nothing to say. “I can tell you,” my colleague went on, “of a man in Leipzig, a judge. He was not a Nazi, except nominally, but he certainly wasn’t an anti-Nazi. He was just—a judge. In ’42 or ’43, early ’43, I think it was, a Jew was tried before him in a case involving, but only incidentally, relations with an ‘Aryan’ woman. This was ‘race injury,’ something the Party was especially anxious to punish. In the case at bar, however, the judge had the power to convict the man of a ‘nonracial’ offense and send him to an ordinary prison for a very long term, thus saving him from Party ‘processing’ which would have meant concentration camp or, more probably, deportation and death. But the man was innocent of the ‘nonracial’ charge, in the judge’s opinion, and so, as an honorable judge, he acquitted him. Of course, the Party seized the Jew as soon as he left the courtroom.” “And the judge?” “Yes, the judge. He could not get the case off his conscience—a case, mind you, in which he had acquitted an innocent man. He thought that he should have convicted him and saved him from the Party, but how could he have convicted an innocent man? The thing preyed on him more and more, and he had to talk about it, first to his family, then to his friends, and then to acquaintances. (That’s how I heard about it.) After the ’44 Putsch they arrested him. After that, I don’t know.” I said nothing. “Once the war began,” my colleague continued, “resistance, protest, criticism, complaint, all carried with them a multiplied likelihood of the greatest punishment. Mere lack of enthusiasm, or failure to show it in public, was ‘defeatism.’ You assumed that there were lists of those who would be ‘dealt with’ later, after the victory. Goebbels was very clever here, too. He continually promised a ‘victory orgy’ to ‘take care of’ those who thought that their ‘treasonable attitude’ had escaped notice. And he meant it; that was not just propaganda. And that was enough to put an end to all uncertainty. “Once the war began, the government could do anything ‘necessary’ to win it; so it was with the ‘final solution of the Jewish problem,’ which the Nazis always talked about but never dared undertake, not even the Nazis, until war and its ‘necessities’ gave them the knowledge that they could get away with it. The people abroad who thought that war against Hitler would help the Jews were wrong. And the people in Germany who, once the war had begun, still thought of complaining, protesting, resisting, were betting on Germany’s losing the war. It was a long bet. Not many made it.” © 1955, 1966, 368 pages | ISBN: 0-226-51192-8 by Drew Terry (3 articles, 0 quicklinks, 28 diaries, 125 comments [2 recommended, 0 rejected]) on Thursday, Jul 31, 2008 at 6:17:46 PM
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Reply: Mayer's words emphasize my points
I have read this by Mayer more than once since it was first published, even though I was only 10 the year of the first publication, and agree with many of its messages - this one especially: And then there is this part: This points out the absolute necessity for having (and living by) principles that are solidly based in reality. by Kitty Antonik Wakfer (26 articles, 27 quicklinks, 9 diaries, 163 comments [15 recommended, 0 rejected]) on Thursday, Jul 31, 2008 at 7:39:40 PM
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Reply: Thanks, Kitty
Thanks for your response. I agree with you to the extent that we are now seeing full-blown "corporatism" as Mussolini described when he said, "Fascism should more properly be called 'corporatism' since it is the merger of state and corporate power." What prompted me to reprint my favorite passages from Mayer's book was the following: Where you wrote: by Drew Terry (3 articles, 0 quicklinks, 28 diaries, 125 comments [2 recommended, 0 rejected]) on Thursday, Jul 31, 2008 at 8:08:11 PM
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Reply: Understanding of Terms Used is Essential...
'I believe "government" is the natural result of our system of capitalism which "in order to sustain itself it was compelled to go all the way" ' "Despite what those managing companies or merely employed by such managers think, governments are not a necessity for the existence of an orderly society - one where physical harm is the rarity and, in such an occurrence, restitution is used to rectify the harm and social preferencing is used to strongly promote both the completion of restitution and the prevention of similar future actions." You did not question this, Drew, as to how this could be so. The nature of human beings does not automatically lead to the conclusion that individuals must be ruled by others in order that there be orderly interactions between them. Society, just like any other natural system can be naturally self-regulating by means of interactions between its members, if only humans seeks to discover and are allowed to implement the methods by which such self-regulation can be effective, rather than continuing to embrace social systems that need to be constantly held in an unnatural (and very non-optimal) state of balance by the operations of their rulers and other influencers. Individual self-order without rule by others is the social system whose members are humans, who have become fully adult. Just as people can become physical adults, so can they become social adults - if only they are allowed (and even required in the sense that they will not achieve their desires unless they do) to socially mature sufficiently. by Kitty Antonik Wakfer (26 articles, 27 quicklinks, 9 diaries, 163 comments [15 recommended, 0 rejected]) on Sunday, Aug 3, 2008 at 2:03:55 PM
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Reply: Mayer's "system itself"...
Regarding your favorite passage from Mayer - "The system itself could not have intended this in the beginning, but in order to sustain itself it was compelled to go all the way." I add the following comments. The system that Mayer is writing about is *not* unfettered, laissez-faire capitalism but rather what I described at the beginning of my article as "a mix of capitalism + lots of government involvement". Interference with trade between individuals - the market, had begun ages before in Europe - and before that in the Middle East and Africa. It was there right at the start of the US, during the revolutionary war and under the Articles of Confederation before the Constitution - and has grown enormously since that era via regulations of all sorts that require band-aid fixes when the distortions in the market place created by those regulations become yet another political problem because of the real life difficulties that ensue. **Kitty Antonik Wakfer by Kitty Antonik Wakfer (26 articles, 27 quicklinks, 9 diaries, 163 comments [15 recommended, 0 rejected]) on Sunday, Aug 3, 2008 at 5:27:18 PM
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The size of government
has grown so creating political entrepreneurs as well as market entrepreneurs. The people need to wake up and compete. Capatlism as it is currently configured doesn't do risk and therefore the future very well. by kwalsh (4 articles, 0 quicklinks, 7 diaries, 275 comments [10 recommended, 0 rejected]) on Thursday, Jul 31, 2008 at 11:20:47 PM
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Risk Analysis in the current system
This comment is very cryptic and I'm at a loss for understanding what point KWalsh is making in the first 2 sentences. **Kitty Antonik Wakfer by Kitty Antonik Wakfer (26 articles, 27 quicklinks, 9 diaries, 163 comments [15 recommended, 0 rejected]) on Sunday, Aug 3, 2008 at 6:13:57 PM
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Reply: More detail - two issues
Government (except arguably in the US which is broke) is where the money is. Corporations know and understand this and therefore get involved in lobbying. I have developed a short course on Lobbying to enable individuals and community groups to get involved in lobbying in order to act as a counterweight to corporate bodies. The average citizen is unaware of the game let alone able to protect themselves. Second Issue Our current accounting system rewards a short term approach which punishes good risk management. This is due to the liquidity focus of balance sheets. Efforts such as Triple Bottom Line or Balanced Scorecard represent approachs to changing the short term focus of accounting reports but fail as we constantly default to profit as defined with reference to liquidity as the preferred performance measure. You get the behaviour you reward. There is hole in our approach but I'm not giving away my intellectual property. by kwalsh (4 articles, 0 quicklinks, 7 diaries, 275 comments [10 recommended, 0 rejected]) on Sunday, Aug 3, 2008 at 8:57:09 PM
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Government at the bottom of your "two issues"
Government (except arguably in the US which is broke) is where the money is. What you appear not to realize is that these current accounting and corporation evaluation methods to which you refer are a *result*, rather than a cause, of the short sighted thinking and acting which government paternalism has engendered into the minds of the vast majority of the populace. This goes back to what I wrote in my previous reply - "Most individuals have very little savings - a protection against the effects of known or possible risk - since numerous government programs exist that create a supposed "safety net". And companies are very often protected and bailed out by government too. All of this is of course done with money taken from tax payers - expropriated in fact." by Kitty Antonik Wakfer (26 articles, 27 quicklinks, 9 diaries, 163 comments [15 recommended, 0 rejected]) on Monday, Aug 4, 2008 at 9:04:14 PM
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Reply: Thanks for your comments
There are always two sides to any issue which came first, selfishness or the system. I am not a US citizen and am far more of an ant than a grasshopper (In part due to my wife). Traditionally I have given away my ideas freely but I am very angry with the US so I may help but only if I'm paid. Of course because I have studied the area I'm most unlikely to be asked for my opinion similar to the situation with Iraq. My current plan is to wait and pick up the pieces and save a few after the train wreck if I can. by kwalsh (4 articles, 0 quicklinks, 7 diaries, 275 comments [10 recommended, 0 rejected]) on Tuesday, Aug 5, 2008 at 5:42:10 PM
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