America on the brink of a Second Revolution Commentary: 2010 elections guarantee gridlock, anti-capitalist class war By Paul B. Farrell, MarketWatch ARROYO GRANDE, Calif. (MarketWatch) -- â€œWhatâ€™s distinctive about the Tea Party is its anarchist streak -- its antagonism toward any authority, its belligerent self-expression, and its lack of any coherent program or alternative to the policies it condemns,â€ warns Jacob Weisberg in Newsweek. But why not three cheers for the Tea Party Express? Admit it, something historic is brewing. And yes, itâ€™s good for America, even the anarchy. Revolution is renewal. Tea-baggers want to take on both parties, â€œrestore honorâ€ and â€œtake back the country.â€ Bring it on, the feelingâ€™s mutual. OK, maybe most Americans just silently mimic the words, â€œweâ€™re mad as hell, wonâ€™t take it any more.â€ But watch out: After November the campaignâ€™s shrill rhetoric explodes into action. Tea-baggers are kicking the revolution into high gear. Debt is sinking America. Both parties are to blame. So vote out incumbents. Spare no one. We need new leadership, another Reagan or Truman. Congress better get the message: Cut that budget, or theyâ€™ll dump the rest of you in the coming Great Purge of 2012. Unfortunately theyâ€™re tone deaf. Congress cannot see past the election. All that changes in November. So thanks Tea Party, Vegas odds must favor a Second American Revolution. Actually, the revolution is already roaring, hot, itâ€™s about time. The GOP and the Dems had more than a decade. But Americaâ€™s worse off. We need a real revolution to restore sanity â€¦ or we can kiss democracy and capitalism good-bye, permanently. Warning: Another revolution will cost investors 20% more losses Yes, big warning, the Second American Revolution will extract painful austerity, not the â€œhappy days are here againâ€ future touted by tea-baggers. For years itâ€™ll be impossible for most of Americaâ€™s 95 million investors to develop a successful investment or logical retirement strategy. Why? Political chaos will translate into extreme volatility and a highly unpredictable stock market. Result: Wall Street will lose another 20% of the value of your retirement portfolio in the next decade, just as Wall Street did the last decade. So if you think youâ€™re â€œmad as hellâ€ now, â€œyou ainâ€™t seen nuthinâ€™ yet!â€ Hereâ€™s the timeline: Stage 1: The Dems just put the nail in their coffin by confirming they are wimps, refusing to force the GOP to filibuster the Bush tax cuts for Americaâ€™s richest. Stage 2: The GOP takes over the House, expanding its war to destroy Obama with its new policy of â€œcomplete gridlock,â€ even â€œshutting down government.â€ Stage 3: Obama goes lame-duck. Stage 4: The GOP wins back the White House and Senate in 2012. Health care returns to insurers. Free market financial deregulation returns. Stage 5: Under the new president, Wall Streetâ€™s insatiable greed triggers the catastrophic third meltdown of the 21st century Shiller predicted, with defaults on dollar-denominated debt. Stage 6: The Second American Revolution explodes into a brutal full-scale class war rebelling against the out-of-touch, out-of-control greedy conspiracy-of-the-rich now running America. Stage 7: Domestic class warfare is compounded by Pentagonâ€™s prediction that by 2020 â€œan ancient pattern of desperate, all-out wars over food, water, and energy supplies would emergeâ€ worldwide and â€œwarfare is defining human life.â€ Whatâ€™s behind our 2010-2020 countdown? It became obvious after reading the brilliant but bleak â€œDecadence of Election 2010â€ report by Prof. Peter Morici, former chief economist at the International Trade Commission. He sees no hope from Americaâ€™s political parties, just a dark scenario ahead. Here are the 10 points we see in his message: 1. Expect nothing positive from Dems, the GOP or Tea Party Yes, weâ€™re all â€œjustifiably ticked off.â€ But â€œDemocrats, Republicans, and yes the Tea Party offer little that is encouraging.â€ Earlier Morici warned: â€œDemocratic capitalism is in eclipse. â€¦ Politicians have deceived voters,â€ and are â€œsuffering from delusions of grandeur, self deception and good old-fashioned abuse.â€ 2. Democracy has become too-big-to-govern â€¦ by anyone â€œThe current economic quagmire is a bipartisan creation.â€ Bush failures led to a â€œGreat Recession â€¦ reckless Wall Street pay and fraud, a breakdown in sound lending standards by Fannie Mae, Freddie Mac â€¦ Countrywide, and a huge trade deficit with China and on oilâ€ leaving â€œBeijing and Middle East royals with trillions of U.S. dollars that they invested foolishlyâ€ in bonds â€œfinancing the housing and commercial real estate bubbles.â€ 3. Clinton, Bush, Obama policies all feeding revolutionary flames Even before Bush, â€œall was set in motion by bank deregulation engineered by Clinton â€¦ Secretaries Robert Rubin and Lawrence Summers â€¦ Clintonâ€™s deal to admit China into the World Trade Organizationâ€ handed â€œChina free access to U.S. marketsâ€ while blocking exports. Earlier Dems blocked â€œdomestic oil and gas developmentâ€ and froze â€œauto mileage standards.â€ Obama â€œfinally imposed higher mileage requirements,â€ but after pushing offshore drilling, he â€œpunished the entire petroleum industryâ€ for the BP disaster. 4. Bushâ€™s biggest mistake: Goldman CEO Hank Paulson Morici admits: If Bush is â€œculpable for anything, it was to not see the gathering storm on Wall Street.â€ Worse, his Treasury picks were disasters: [John] Snow was clueless, Paulson devious. He conned a clueless Congress into bailout trillions, â€œbelieving banks could borrow at 3% and lend at 5 and pay MBAs three years out of school five-million-dollar bonuses to create mortgage backed securities.â€ Greed drove the Bush Treasury. 5. All partisan political leaders are destined to sabotage America One thing is clear to Morici: Not only were Americaâ€™s leaders a â€œbunch of second-rate incompetentsâ€ on both the Clinton and Bush teams, â€œObamaâ€™s ratcheting up government spending and taxes wonâ€™t fix whatâ€™s broke, and neither will the GOP prescription of tax cuts and deregulation.â€ Get it? Democracy is in a classic double-bind, no-win scenario. 6. Americaâ€™s democratic capitalism trapped in systemic failure Morici simply dismisses â€œObamaâ€™s two signature initiatives -- health-care reform and financial services reregulation.â€ They â€œsimply donâ€™t work.â€ Why? Politicians â€œfailed to address the root problem, Americans pay 50% more for doctors, hospitals and drugs, than subscribers to national health plans in Germany, France and other decadent socialist European countries.â€ Yet, insurers hate reform, will self-destruct America first. 7. Wall Streetâ€™s insatiable greed is a virus that never sleeps Wall Street banks are â€œback to their old tricks,â€ warns Morici, â€œhustling municipal governments into the kind of quick-fix budget schemes, like selling parking meters and airport fees.â€ Why? Wall Streetâ€™s â€œhustling shoddy corporate bonds that lack adequate collateral and may never be repaidâ€ to justify their absurd mega-bonuses. And theyâ€™ll keep doing it till the revolution creates a new non-capitalist banking system. 8. New political leaders offer no hope -- Wall Street rules America GOPâ€™s next leaders will fail: â€œCutting taxes and mindless deregulation are not the answer.â€ We need the revenue. They have no real plan to trim â€œ$1 trillion from federal spending â€¦ few believe deregulation will fix health care or Wall Street.â€ The GOP has no â€œeffective government solutions to health care, Wall Street, fixing trade with China, and dependence on foreign oil.â€ And the Tea Party â€œonly offers a purer form of failed Republicanism. Tax and spend less, and turn the country over to the robber barons.â€ 9. Praying for a messiah, weâ€™re sleepwalking till the revolution Moriciâ€™s solution: America â€œneeds a prophet, another Harry Truman or Ronald Reagan.â€ But weâ€™ll never get one, until a catastrophe hits. Wall Streetâ€™s so greedy, so corrupt, so untouchable, so much in control, they will bankroll and control all future â€œprophets.â€ 10. The Second American Revolution coming Yes, extreme austerity: â€œAmericans must accept fewer government-paid benefits -- for the rich, the poor and those in between -- and must acknowledge the market works best most of the time, but it is not working in health care, banking, China, and oil.â€ Huh? Sounds like classic economistâ€™s double-speak: â€œThe market works most of the timeâ€ â€¦ except the market doesnâ€™t work at all in the four biggest economic sectors? Fuzzy thinking? Morici warns, we need â€œnew approaches to regulating, yes regulating, what the medical industry charges, bankers pay themselves, what Americans tolerate and buyâ€ and â€œguiding big oil and car companies to sustainable solutions.â€ Holy cow, he suddenly sounds more like a liberal politician than conservative economist. Yes, heâ€™s reflecting the total chaos coming on the short road to the Second American Revolution. In the end, however, you have to admit the good professor does make a lot of sense: â€œSounds radical but running the world has never been a choice between statism and anarchy,â€ says Morici. Choice? Unfortunately, he offers a false choice: Running America effectively means accepting â€œthat the private sector is not the enemy and government is not evil, but neither can serve the other, and us, if value is not seen in each.â€ Laudable, but impossible because once the GOP Tea Party of No-No is back in power, compromising is not on their agenda, â€œgridlockâ€ is. So anarchy is the only choice -- they will never, never work with Democrats â€¦ until forced by the Second America Revolution when the middle class finally rises up and overthrows the greedy wealth conspiracy of Wall Street, Washington, CEOs and the Forbes 400. Till then, anarchy rules as the conspiracy keeps looting Treasury, stealing from taxpayers, conning us all.