More woes for the economy today as world financial markets took a nose dive, setting new record losses. the World economy is now facing a possible global panic. All eyes are on Wall St.
Last November, I broke my economic silence and posted an article on the inevitable recession that we’re all headed for. The December that followed, witnessed the owned media beating us over the head with rosy optimism, sunny sales reports and news story after news story about how this Christmas sales season was doing just great. The propaganda was so thick, with so few voices of descent in the crowd, I myself began to question all of the research I poured into that last article. I reminded myself that this was an increasing trend over the past 10 years that the media sings the same tune the Wall St. powers dance to (after all their part of the same family). You know the tune: it’s that one where all the economic news jumps up and down with a big “For Sale” sign when the economy hits a downturn and sings loud sweet praises of the marketplace to the harmony of “I Will Survive”. It’s an upbeat musical of how we finally beat the age old “Boom & Bust†economic cycle. Make profit from another man’s misery.
Easy for them to say! The super rich almost always land on their feet! Unfortunately for us, they land on us, it is almost always OUR misery.
Then came 2008. The Christmas shopping season turned out to be a disaster, sales are down, warehouses are full, manufacturing orders are down. The consumer market, now more than ever seen as the only thing keeping the U.S. market afloat, was heading south. Energy prices are up, property values are down, inflation is up, the value of the dollar is down, unemployment is up and hopes, dreams, lifestyles and prosperity are down.
Recession? Just weeks ago it was a word heard infrequently. By the second week of January, I noticed the headlines in Forbes magazine’s RSS feed all contained the word recession. Last week Bush finally acknowledged the recession (probably trying to avoid his dad’s denial mistake) and the Presidential candidates all battled over who had the best stimulus package.
Last Friday, on Left, Right and Center, the economy was the top issue. Conservative columnist Tony Blankley (a reasonable free market Rightie) declared that this recession won’t be bad, especially since the World markets are doing great. All of that liquidity will rush to fill (or actually buy up) the American infrastructure and keep the economy moving forward. He’s probably a firm believer in the idea that 2008 is the “year of decoupling,†which is just a fancy way of saying that the American economy is no longer king, and that Europe, India and China can thrive along side a struggling U.S.
This idea of decoupling, unheard of a few years ago, is in its infancy. While booming young foreign markets are getting a little over confident perhaps, it sounds like disastrous news for the U.S. It sounds as if the world no longer needs the U.S. nor its consumers. Free marketers claim this is part of an overall “correction” that we will just have to learn to accept. Personally, I find the notion a little depressing. The American worker finds it equally disconcerting, in fact, they’re mad as hell. How could this happen so quickly? It’s as if Bush took a great nation and made it irrelevant in just 7 years.
Robert Scheer of Truthdig.com (as well as Left, Right & Center) wrote an article on this very subject. “Bush broke the United States†he declares, with tax-cut hand outs to the rich, free market deregulation mumbo-jumbo and an imperial foreign policy that failed miserably. Bush runs off to the Saudis for help, while the home base of most of the 9-11 criminals raises the cost of oil, then uses the money to buy up our own assets. Bush broke it, but the Saudis bought it.
While Bush has been about the worst thing to happen to America since the Vietnam War, the responsibility for our hardships lies squarely with the American people, who elected 30 years worth of Free Market politicians to Congress and the White House. Reagan was a blundering fool when it came to economics. Trickle-Down economics was, according to myth, a joke written down on a cocktail napkin at an illustrious insider party. It made the rich richer, increased income disparity and hurt the middle-class. Yet the American people bought into cheap talking points about taxes and allowed more Reagan clones to run up massive spending programs for useless defense ventures that our grandchildren will have to pay for. The free lunch we thought we were eating was billed to the future generations. A dangerous gamble on America’s future was committed.
Clinton too contributed to the mess. While he actually balanced the budget unlike his Republican free market counterparts, he supported deregulation and pushed for free trade, expanded media consolidation and signed Bush Sr.’s baby: NAFTA. The long term outcomes have destroyed modern media interests, allowed them to be co opted by corporations and his China free trade agreement has allowed Walmart to destroy small business and manufacturing in this country. We all ate it up, and now we just may elect his wife! It is disturbing to me just how stupid my fellow countrymen can be. NEWS FLASH MIDDLE AMERICA: Just because a politician says something, doesn’t mean he/she believes it or will do anything about it. YES, politicians lie. Deal with it!
Today’s massive world sell off has proven that while the U.S. is indeed weak, it’s still the great supermarket to the world and if we don’t have money, you guys over there have nothing to sell, which means no jobs, which means no money, which reverberates through out the world’s economy. Perhaps these economists, free marketers and venture capitalists aren’t quite as smart as they thought. Perhaps capitalism, in this current state, is simply too self-destructive for its own good. Perhaps we need more “change†than electing any of these Presidential wanabes can possibly achieve.
Tomorrow, the World will look to Wall St., closed for MLK day, for its cue. This already abysmal year for the economy may get a whole lot worse if the Wall St. Masters of the Universe don’t put their money where their mouth is.
My guess, it could go either way, however I wouldn’t be surprised by a massive sell off. The world’s wealthy and powerful people are always playing Monopoly with our lives, selling us out for their own interests. Smart investment perhaps, or maybe they’re just cowards.
UPDATE 01-22-08
Apparently the Federal Reserve also had their eyes on Washington, and made a surprise 0.75% rate cut to stave off a crash. Bernanke, the Fed Chair, is no Greenspan, or so I hear just about everywhere, and he’s probably getting an ear full from free marketers (after all, remember the markets must run free without regulation) that he’s not doing enough to manipulate the economic downturn in their favor.
It’s a desperate move. Greenspan’s bank rarely moved interest rates more than a quarter point at a time, using a half rate to show that they meant business. They were different times as well. Inflation was not on the up and up without a doubt and raising interest rates is part of the Fed’s playbook to combat inflation. Today, inflation is beginning to accelerate and along comes weak and easily influenced Bernanke, to lower interest rates. This doesn’t mean lenders will be necessarily lowering their interest rates on sub-prime lendees who can’t make the payments, or for the rest of us with loans as well. All it means is that the Fed has set the example, which serves more to Wall St. than it does for Real Americans. I’ll bet you my banks will lower my savings account interest rate. They never seem to fail to remind me that I really have no reason to keep my money in an institution anymore.
MESSAGE TO WALL ST: Interest rates will not save you, or uhm, I mean the money you have invested in America’s economy. The economy is clearly heading for a bust cycle. Stop whining about the state of the economy and “keep your money in for the long term” like so many investment bankers shovel so much advice on to unsuspecting mutual fund clients. Stop day trading! Go home and count your millions and stop playing with our lives for fun. There will be recession, yet it doesn’t have to be coupled with a stock market crash.
Do you think they’ll take my advice?
I’m telling you, the past 30 years with help from the 30 before it, have created boom. However, they’ve created bust as well. Maybe it’s time to start reforming our model. There is too much chaos on Wall St. and J.P. Morgan himself, father of the capitalism we know today would not approve. All of these hustlers and scam artists, loophole laws and credit card agencies getting away with 30% interest and a myriad of fees to the point where it ruins people’s lives (your better off with a loan shark). J.P. Morgan was a freak about order. Solitaire was his favorite game, that is, when he wasn’t merging American businesses into an Oligopoly. He understood the nature of power and did more to create a regulated economy than just about anyone.
American (I mean multi-national) business is failing to see the point. The current economy functions like a drug addict. It demands more. More profits, more success, more growth, more power. As any alcoholic will tell you, there is a point where it just stops working. We need responsibility, regulation, laws that protect consumers, an overturn of Bush laws that needlessly protect corporations, a cap on interest rates, enforcement of existing anti-trust laws, stability.
Markets cannot function when corporations are allowed to do what they want to do. It’s like a game of basketball without a referee. Pretty soon, guys are beating up players on the other team so they have an advantage. It doesn’t work, and neither does laziez faire. A corporation’s goal is to become a monopoly, which is bad for business. Markets need regulation and besides, corporations profit heavily from government intervention in trade protections, monitoring the ports, security, SEC, trade negotiations and a whole lot more from the nation’s largest employer: The Federal Government (which btw includes the Armed Forces you small government, war-hawk hypocrites).
As for Bernanke’s rate cut, It may have eased a crash today (so far to a modest 100+ point loss), however there is only so many interest rate points that you can cut. Plus, you run the risk of inflation. Doing what we’ve done in the past has gotten us here. We need a new direction. Reform, or else!
I expect they will not heed this or similar warnings. It will take a great crash to wake us all up from the fact we’re living the good life on borrowed time & money.