On a very regular basis, Treasury Secretary Tim Geithner engages in magical thinking with deliberate attempts to delude American workers into believing that business investment and consumer demand are on the uptick. Geithner’s pretense isn’t only disingenuous and disrespectful, but dangerous. How? He continually suggests that American consumers should feel comfortable borrowing and spending in the vain hope of spurring any hope of economic bright light.
Mr. Geithner needs to stop with the tim-foolery as these truths hang over our nation like a plague:
- The real unemployment rate is 18.3%, instead of the 9.5% rate the administration uses.
- The number of real unemployed workers in all four categories of unemployment is no less than 29.3 million, instead of the administration’s one-category-only figure of 14.6 million.
- In real terms the all-important “jobs gap” is 21.3 million new jobs.
- Since the start of the Obama administration, the number of real unemployed workers has increased by 4.6 million. The U.S. economy needs to add 150,000 new jobs each month simply to keep up with “population growth.”
- For unemployment benefits, the average number of weeks unemployed is at least 34 and the number of workers unemployed a half year or longer is at least 10.1 million.
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Global industrial production now shows clear signs of recovering at least when comparing the current ‘recession’ with the Great Depression. During that time, a decline in industrial production continued for a full three years. The question remains regarding final demand for this increased production. Will renewed demand actually materialize or did the U.S. government create a small bubble with $2 billion “Cash for Clunkers” program? Will consumer spending, especially in the US, remain weak, causing the increase in production to go into inventories? If production simply falls into inventories, this will result in sharp cut backs and result in a return to recession. The labor market combined with ailing business credit and finance in the U.S. does not hold out much promise for an end to the recession. Will the Obama administration jigger with credit markets to somehow expand credit markets?
Global stock markets and investment banking and profiteering have mounted a sharp recovery since the beginning of the year. Still, the decline in stock market wealth remains even greater than at a comparable stage of the Great Depression. The downward spiral in global trade volumes has abated. This may be due to the return of the old ways of doing business that President Obama has decried publicly in the last few days. Data exists for June that shows a modest uptick in trade, but the collapse of global trade remains dramatic by the standards of the Great Depression.
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For the last week, Fed Chairman Ben Bernanke has been advertising his personal integrity without trying to take an actual stand. He admits that criminal conduct in high finance and investment must be prosecuted and that having to bail out the likes of Wall Street firms that continue to play high stakes gambling games makes him ill. Bernanke continues to try to straddle the fence as he justifies the decisions made as his refusal to allow America to enter a second Great Depression. He offers little fire or passion to see any change beyond making admonitions toward change in the system to protect the nation from avarice. Bernanke readily admits that if adjustments are not made soon, America faces the acute risk of uncontrolled inflation. His need to express his personal integrity almost seems comical as he performs what must be one of the toughest and most thankless jobs on the planet, at least in the public eye.
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The recession and the rising gulf between the haves and have nots; investment bankers versus newly impoverished and unemployed Americans is changing viewpoints. At one time, any company reporting record profits was certain to earn applause for this was seen as the American way. Americans were firmly invested in what they believed was the trickle-down theory of economics. The scam that investment bankers have pulled on the world with their highly staked leveraging games has changed much of this sentiment. Now that institutions that formerly made up the investment banking capital of the world are recovering with the intent of paying back taxpayer-backed Federal Reserve bailout money, Americans are leering at the possibilities that nothing has been learned from the crisis of financial literacy that prevails itself upon the world.
Writer David Segal has introduced the idea that class resentment is to blame as investment bankers continue to rake in the speculation-based financial dough based on the same numbers games that brought the nation to the edge of financial oblivion. The reality runs much deeper. In the eyes of Americans, the reality isn’t about making money, but how money is earned. Americans feel that they are being scammed because the nation operates by multiple sets of rules depending on how much money and influence you can peddle. Even members of Congress like Charles Schumer have demonstrated that they believe Americans are simply brutes to be used by the system to bolster corporate along with government wealth and influence.
Now that the likes JP Morgan Chase and Goldman Sachs are reporting fantastic encouraging numbers after having enjoyed bailout at the expense of Americans and the system at large, Americans see that the victory is very hollow. Recent financial victories in American are without benefit to anyone that doesn’t directly play the insider financial games on Wall Street. Multinational corporations continue to rule the roost behind the scenes, taking more out of America than they put in. Profit without personal responsibility is king. Most of America continues to be in great pain and America already knows that recent financial victory on Wall Street is a result of the same deluded thinking and policy that still threatens to destroy the financial system. It is not a system based on honesty and real numbers, but simply a gambling game of manipulation and opportunity.
The fact is that the Federal Government likes the control and authority that it wields in the banking community as a result of the bailout. The same can be said for the money that government has invested in the corporate structure. Uncle Sam holds the cards as the government maintains a front row seat at AIG. This is the only means that government now has to rein in the continued greed and avarice of Wall Street and corporate investors. The system hasn’t been reinvented as promised nor have sufficient reforms taken place to insure the safety of financial system on any level. We are still living in the last century. Nothing has changed. That is why government is so quiet about what is a hollow victory on Wall Street. ~ E. Manning
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According to the Associated Press, Pope Benedict XVI has called for a new world financial order guided by ethics, dignity and the search for the common good in the third encyclical of his pontificate.
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