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Money for Nothing and Your Schools for Free
By David Glenn Cox
Mark Twain said, "Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it."
May 17 (Bloomberg) -- "The U.S. economy may return to its pre-crisis peak next quarter after a recovery former Federal Reserve official Peter Hooper calls 'surprisingly strong, historically weak,' which has seen corporations and the rich prosper while small companies and the unemployed struggle."
Small companies aren’t struggling, they are dying, and every month four hundred thousand Americans use up their unemployment benefits. They fall like leaves upon the ground, no longer counted or included as part of the tree. How can this be? How can the economy return without returning to the people? Could it be like BP, that you say you can put a four-inch pipe inside a 21-inch pipe and then claim that you are capturing forty percent of the oil?
Our world is filled with these crazy statistics that just don’t seem to make sense. For instance, President Obama’s income has jumped from $4.1 million in 2007 to $7.7 million in 2009. The increase is attributed to book royalties for books written several years ago while he was a senator. When the Clinton's left the White House in 2000 they listed $357,000 in income for the year, but since that time up until 2007 they have earned $107 million.
Alan Greenspan says our economy is “a bivariate type of economy.” Bivariate is a fancy way of saying, “Gee, we don’t know why but the money isn’t trickling down like we predicted.”
“The uneven recovery may force Fed Chairman Ben Bernanke to keep the benchmark federal funds rate on overnight loans among banks near zero until the second quarter of 2011 to help reduce unemployment," said David Hensley, director of global economic coordination for JPMorgan Chase & Co. in New York.
Reduce unemployment? Riddle me this, Batman, how does giving the banks free money help unemployment? We’ve been giving the banks free money for almost two years now and only bank profits have improved. So is the answer just to keep on doing it and hope for the best?
Unemployment is at record levels as wage growth barely covers inflation. Small business is having a hard time getting credit from banks while many “True” small businesses are forced to rely on credit cards to buy materials. Consider that the big banks on Wall Street reported that their in-house traders earned money every single trading day of the first quarter. It becomes pretty clear that our economy, the economy for those of us who haven’t earned $107 million, is not stagnated but strangulated.
The experts call it a “muted recovery.” With new cars sales running annually at 11.2 million new units while the number of vehicles being scrapped each year is 15 million, that makes it abundantly clear that you are dealing with a collapsing consumer economy. The neighborhood where I bought a house in 1996 for $90,000, they are today selling for $44,000. Two-thirds of all wealth in the country is held in real property; a fifty- percent drop in property values is a sucking chest wound to the economy.
Back when the world made sense, real property appreciated at five percent a year and depreciated at two percent a year. So that $90,000 house should have a value today of around $132,000. Real property prices are in free fall. Commercial foreclosures are predicted to double their historic levels by the end of the year; 4.5 million homes will be foreclosed and credit card defaults are still above 10 percent.
Can those in the rarefied air of the upper levels of the economy actually believe that they can continue to reap huge profits while the rest of the economy strangles? It doesn’t take a rocket scientist to figure out that they can’t. There are plenty of rocket scientists to ask as NASA passes out pink slips and goes out of the manned space flight business, leaving it to the Russians and the Chinese.
The complete and total abdication of reality-based statistics is making head scratching a chronic condition. Mohamed El-Erain, CEO of the largest bond trading company in California, said, “It’s not just about Wall Street versus Main Street... It’s about large companies versus small companies and wealthy households versus those less well off.” (Pause, head scratch)
It’s about Wall Street vs. Main Street vs. Pentagon Street; the President has asked for another $30 billion to continue the war in Afghanistan. We’ve spent, on average, one billion dollars per year since 2002 to build infrastructure projects in Afghanistan and experts who have looked at the programs estimate that 90 percent of the money is wasted. Forty-seven percent of the money has gone to American experts. Senator John Kerry wants to increase that aid to $1.5 billion per year to build schools and roads.
For that other American economy the President and Congress have another plan to bring about a recovery. Tax cuts! Tax cuts to buy equipment; tax cuts to hire workers. Tax cuts to switch to alternative energy and tax cuts to buy new cars and new homes. If it was good enough for Ronald Reagan and George W. Bush why shouldn’t it be good enough for Barack Obama and the Democratic Congress?
May 18 (Bloomberg) -- "Two Democratic U.S. senators will try to beat back primary challengers who could deny them re-nomination today in an election year that’s becoming tough for incumbents.”
You’re kidding! Really? Why would anyone want to unseat Arlen Specter? Sure, he’s eighty years old, but he’s a spry eighty. Maybe it's because he’s been a Republican for most of his career, but so has Blanche Lincoln, the other Democrat facing a primary challenge. Lincoln is a member of Brent Bozell’s Media Research Center, which aims to protect us from bad words and indecency on television. She is known on the Senate floor as the Senator from Wal-Mart. The media describe it as an anti-incumbency mood in the country, which is quite possibly the understatement of the year.
Can we rebuild our economy with tax cuts for the wealthy and big business? Can we continue to give away money to the big banks in the hopes that someday it will spur employment? Sure, it’s done nothing in the first two years, but maybe we’re just impatient and should give away free money for a few more years. Can we continue to spend a billion dollars per year building schools and roads in Afghanistan when we can’t afford to build them in this country? Perhaps the Afghan government should offer tax cuts.
The direction we are walking in is neither accidental nor mistaken; it is bivariate, hogs pushing at the trough trying to grab as much as they can before it empties. It is the abdication of governmental responsibility, the ejecting of the middle class while the transfer of wealth goes on unabated, forgetting the lessons of history.
A nation whose government owes its people nothing is owed nothing by its people.
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