There is an uneasy tension in the air today. Anxiety, discomfort, even panic is on the minds of many, from the largest, most powerful financial houses right down to the lowliest blue collar family. It is a feeling that this great machine of ours, this United States of America, is perhaps on the verge of a total breakdown. From financial markets to the Presidential Race, times are tough.
Exaggeration? Well you tell me. The other day an NPR financial analyst sketched out a scenario where the American Dollar plunges out of control, thereby causing a meltdown in virtually ALL world markets. He stressed that the scenario was unlikely, however it was plausible. You know things are bad when the media begins to talk about the possibility of complete disaster! 6 months ago, no one dared say we were in a recession, 3 months ago, it was the “R-word†today it is reality, with even the likes of Greenspan and Bernanke using the word regularly. Even ol’ Bush claimed we weren’t in a recession last week, today admitted that the economy “is going through tough timesâ€. UH OH! If Bush is saying it, now I know we’re f’ed.
What’s more alarming is that the dreaded “D-word” is starting to creep it’s way in. NBC Nightly news ran a story last night where a prominent financial analyst claimed that we are only just beginning to find out how deep this well is going to be. Could it be depression? I sure hope not, most Americans are not so optimistic according to a recent poll.
Today, the economic picture looks far grimmer than it did just 1 month ago. With oil over $110 a barrel, we’re seeing prices that shattered the records of the 70s and early 80s and it isn’t even summer. This is affecting the cost of everything right across the board as inflation is once again rearing its ugly head. Confidence is certainly down all across the board, in financial markets, corporations, housing, even the consumer confidence index is seeing negative sentiment not felt since the last Bush Administration. Investors are running away from real-estate, away from stocks, bonds, etc. toward the safest bet on the market, precious metals. With gold valued at over $1000 an ounce, the severe distrust of the corporate sector is underscored.
That’s nothing. In the past few weeks a series of hedge funds have utterly collapsed. More than simply, the latest casualty in the credit bubble, they are harbinger of things to come. Even Carlyle Capital, a member of the maniacal Carlyle Group, yes THAT Carlyle Group, utterly collapsed the other day. Their questionable hedge funds raised concerns causing a calling in of their loans. When they could not raise nearly enough capital, even after a credit extension from parent company Carlyle Group, their stock plunged 98% causing a complete default on Billions of dollars in loans. The Carlyle Group distanced themselves from the controversy, claiming that they had no connection to Carlyle Capitals securities, further claiming that only their employees had any stake in the company. Well sucks to be them I guess. What’s worse is that this is not the first investment company to collapse and since Wednesday, it hasn’t even been the most recent. Independent investment bank Bear Stearns collapsed in a vast desert of debt today and JP Morgan Chase is ready to swoop in and carve up what’s left. Many are asking “what’s next?†Others are calling for a taxpayer bailout, which will be astronomical in cost, on the rationale that if we don’t spend billions now, we’ll spend trillions later. Some are calling this the end of the Roaring 90s. Thank God we’ve been saving our money and not throwing it down the drain in some useless war abroad to liberate… d’oh!
Wall St. doesn’t like the sound of banks falling, it is perhaps the most dreaded sound in the Corporate Sphere. Despite Fed Chair Ben Bernanke’s little credit package booster shot only a few days ago, (you know, the one I tore a new one out of just a few days ago), the markets reversed their gains and the dollar continued to decline in value. So much for Forbes Magazine’s new moniker “Super Benâ€, I guess stagflation is Super Ben’s kryptonite. With modest inflation reports encouraging a glimmer of hope that Super Ben will cut interest rates again, some are hopeful, like our fearless leader Bush, who encourages optimism. Then today Bernanke cut interest rates 3/4 of a point, attempting to do anything and everything to save Wall St. from the brink. Unfortunately, there is no talk of a bail out for the millions of Americans facing foreclosure, nor is there any talk of doing anything substantial to inject capital into the average Americans, apparently Wall St. takes priority.
Re-regulation is, at the very least, back on the table, with many calling the conservative economic models yesterday’s BS story of the week. On last Friday’s Left, Right & Center, even the conservative Tony Blankley is continuing to be less than optimistic about our economic future.
I’m no economist, and I offer only what I see as common sense, that Wall St. is overrated as a key factor of our economy. The economy’s life blood is not the size of a failing company CEO’s severance package (ie: Countrywide), the life blood is us, we the small people who buy homes, consumer goods, vacations and food. This is exactly what guys like Bush don’t get. Interest Rates don’t mean a damn thing to most Americans and most Americans are spending less because they have nothing to spend. Loans are NOT cutting interest rates, credit cards are NOT cutting interest rates, infact they’re even raising them the greedy bastards. Most folks will still be stuck owing money to these corporate loan sharks long after Wall St. gives up the meaningless gains once again. Real Americans are hurting and I hate to break it to Bush and the Masters of the Universe over there on Wall St., but the world does not revolve around them.
A good friend of mine was doing great a few months ago in a plush upper-class real estate profession. The company wasn’t worried at all by the credit crunch, which had already claimed so many victims. Today the office is scrambling with all new hires frozen and many jobs on the chopping block. The mood in the air is changing even in the upper-middle-class. Thankfully my friend was not one of the millions of foolish Americans who raced into a lavish life-style with loan after loan after loan. These folks who financed their whole lives on credit are this new recession’s next victims. The loss of a job in a two-income household could cause a complete destruction of their livelihood, as credit card bill after mortgage bill after student loan bill piles up eventually drowning the family into poverty.
The situation is really bad out there, and the times ahead don’t look any better. With Hillary and Obama, our only hope, playing right into Republican hopes and dreams, the chances are looking brighter for the man who wishes to keep the U.S. fighting a war that will cost us $Trillions.
The blood feud between the candidates is rough, hurting our side’s momentum, giving old McCain a free pass on the rapidly declining situation in Iraq.
Furthermore, the disintegration of Eliot Spitzer has brought down a chief reform of Wall St. and Securities laws. Wall St. literally rejoiced as one of our economies last great hopes destroyed his own career and vaporized any remaining hope of preventing Wall St. from self-destructing.
Times are tough out there all right, with no end in sight of the proverbial light at the end of the tunnel. Bush and his cronies really did a number on this place didn’t they?