The Illusion of Economic Recovery
By Torrance Stephens
I figure Obama and the democrats have to say such to make themselves look good. Likewise, the Republicans have to intentionally imped programs and the efforts of the President to make him look bad. Regardless, the view from the ground level remains one of wealthy politicians bickering like caddy nanny goats. Charlie Brown’s sister Sally said it best in “The Great Pumpkin”…”You elect them then they weasel out of their promises.”
Maybe we get what we deserve. We have been on this trajectory since Nixon accepted the Britton-Woods agreement, removing American from the Gold standard and an asset based monetary system. Now artificial asset bubbles are retro chic and occur everywhere we look in our economy. That’s what happens when one has no asset to back paper. All the government has to do when they are short on cash and need to pay someone is print as much paper money as needed, borrowing more and more and growing more debt (something us regular folk cannot do) creating an environment where everyone from the Government to the Banks accrue debt to capitalization ratios, like MF Global of more than 30 to 1. USB for example is leveraged at 50 to 1.
The question for remains how can one assert that there is an economic recovery occurring in the United States presently and even worse, how can anyone that can do basic math accept this premise? Especially after the credit and derivative based, over leveraged bubble economy we have just experienced that resulted in the financial meltdown in 2008? I cannot put this at the feet of Obama singularly seeing that Republican don’t even have nor have proffered any leadership for improving the economy on anything from the need for state regulation or tax reform, albeit the Democrats especially Obama seem to always cave-in in practice what they dare not abnegate in dictum.
Likewise is the hypocrisy of the GOP, which is on center stage with Mitt “anybody but” Romney. He points fingers at china but seems to ignore the fact that in that nation, spending represents 23% of GDP compared to the United States with 44%. Romney is quick to also say that we are down a path to being like socialist Europe although Germany level of government spending accounting for 48 percent of GDP. In other words that by his logic our goals is heading towards Europe when the facts suggest we are competing with China and playing catches up. He claims that in order to succeed and grow the economy that he will cut spending and balance the budget and lower taxes, which is funny in itself given what we know about our dysfunctional government.
First, the reality is that Obama and Romney are lying out the sides of their necks. On the one hand none of what is being done or said by either can lead to economic growth or a recovery sufficient enough for stable growth in the next decade. It is not the people (although we do have a minor role) the real problem is corporate welfare in the form of state and federal aid to the folk who already have the money and not the folks at ground zero. Yes the Americans with the most loot and corporations have redistribution and shifted wealth and income in America from the middle class to the uber rich and been doing so in plain view since the end of the Regan era. Yet the Republicans claim class warfare on behalf of the Obama Administration and the Obama Administration say he is for Main Street when his actions exhibit otherwise. There is a reason again why The United States has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain. Not to mention that total consumer debt rose at an annual rate of 9.3 percent in December. It is now sitting at a grand total of 2.498 trillion dollars.
Let us examine American International Group, Inc. (AIG). This week AIG with the assistance of the Bush and more so the Obama administrations, reported $19.8 billion in profits last quarter. This the result of a tax break consequent the Treasury Department for AIG and a few other major corporations that helped create the financial crisis of 2008 that exempts them from its right to employ using net operating losses (NOL).
What the past few administrations, the present one and the GOP Presidential contenders are doing is Machiavellian – hiding the truth about how bad our economy is. The unemployment rate today is computed differently from the way it was in 1994. Back then, people who stopped looking for employment and the underemployed—folk who want to work full-time but cannot—were still counted in the numbers. Now they do not. Yet drop in unemployment rates are reported when in reality the US Government measures unemployment using a survey and sample of approximately 110,000 individuals and not number of persons claiming unemployment benefits.
Folks are right when they say there is limited difference between The President and Romney. Both promote economic policies that tighten the association between larger corporations and government. We all know for example that Obama’s former chief of staff, Rahm Emanuel was once a partner at Goldman Sachs and that former Senate Majority Leader Tom Daschle, who now advises the President on Health care reform, is a well-paid lobbyist for the health-industry. Then there is the observation that the Obama administration talks a god game against corporatism, the problem is like Romney the facts state otherwise – at least Romney admits he believes “corporations are people. “Washington has and always will subsidize big industry and provide loot for their research.
Obama knows this and this is probably why General Electric CEO Jeff Immelt Started a PAC to collect money from its employees for candidates “who share GE’s values and goals” of which Obama got more than any other politician. Immelt was appointed to Obama’s economic recovery board and eventually was named to head his Jobs Council (although it continues to ships jobs abroad). His company stands to make a mint on its investing in “carbon offset” assets if the Obama administration institutes its cap-and-trade energy plans via, HR 2454, the American Clean Energy and Security Act of 2009. If passed, GE will get “incentives” to sell energy-efficient appliances ($75 for each dishwasher sold until 2013 and $200 for each refrigerator) that will make it a bundle.
Romney by the same token is no different. He talks the same game. His tax cuts from what I have read and worked out will result in more than $500 billion in lost revenue over the next decade if he is elected, meaning he will balloon the deficit even more than Obama – Greek economic mathematics revisited if you ask me.
All I am saying is that what they say is an economic recovery to me is an allusion, a penumbra of false light. Alexander Hamilton wrote The Federalist No. 85 for a reason – that is possible for wealth to corrupt and result in a central government that is too powerful that serves the elite at the expense of the many. The republicans and the democrats, as articulated through their economic policy don’t see to get this. Obama or a Romney will still continue programs like the why H1-B visas, which are provided for foreign workers in areas such as engineering, when folk like one of my neighbors, a chemical engineer can’t find a job. In general because they cannot problem solve or accept that neither fiscal austerity nor monetary stimulus will work because neither targets nor deal with limiting inflation or increasing employment. Instead they focus on nominal GDP growth, which will get more US citizens to get more and more in debt, which only make things worse.
All while China sits on the side line, with about $2 trillion dollars of our debt, that may eventually depreciate in value because eventually we going to have to deal with the possibility of runaway inflation in a time when it will become more difficult to borrow. We see and feel it o the ground but I doubt Romney or Obama have bought a gallon of milk or a loaf of bread lately. In the “Dunciad”, Alexander Pope wrote “Thy hand, great Anarch! lets the curtain fall,
And universal darkness buries all.”
That us the way I see things now. Like I said, they say that the economy is growing and that we are in the midst of an economic recovery, but as I look at my neighbors who are losing their homes and the parents in the PTA who are under-employed and looking for full-time employment, I must admit I do not see or feel it.