Letters to the Editor
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Bernanke REPUDIATES REAGONOMIX
Gee you wonder how long BB is going to last jousting at GOP icons like Ronald Reagan and 'trickle down economics'. The earth is shaking, what's next on his list,SUPPLY SIDE economics? One can hear Larry Kudlow gnashing his teeth. A fiscal package aimed at low income families will get into the system faster. My gawd man, you give a man a fish, and he eats the fish, and the fish is gone, teach him how to fish, and he has fish for a lifetime.
Everyone of those tried and true homilies, is being trampled upon, who is this SOCIALIST IMPOSTER, Ben Bernanke. doesn't he know he is a political apponitment? Laffer is not laughing. The ghost of Reagan past is turning in its grave. This is the end of an era, or the end of Bernanke.
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rock and hard place
Because of earlier reckless policies by the Fed designed to help the GOP, and the even more reckless tax-cuts and borrowing-to-fund-a-totally-useless war (not useless to the M/I complex, but that's another discussion), the Fed now has nowhere to go.
For short-term political reasons, Bernanke will likely opt for inflation over recession. But that's a bad idea for any number of reasons. As just one example, the millions of boomers with IRA, 403b and 401k plans that don't include energy, commodity or metals funds (and most don't), are going to be in very deep trouble if inflation settles down for a long stay, as it looks to be doing. The market in equities was virtually flat for 10 years in the 70s when we endured a long bout of staglflation. Recessions allow these problems to unwind properly and then growth without serious inflation is possible again.
By delaying the inevitable day of reckoning by lowering interest rates, Bernanke is just going to make problems worse. A deep recession would be the best thing for the greatest number in the long run, however painful in the short-run. But that's not what we're going to get. We're going to get inflation.
Worse, we'll get both: stagflation.
Buckle your seat-belts.
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Terms
When the stock market falls 10% from its high it is a "correction". What is it when it hits 20%? Or 30%?
Why do we put so much stock in the market as an assesment of the economy? Or GDP for that matter? Wages have been stagnant for Bush's entire presidency while prices continue to rise.
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The Fed is out of tricks
Bernanke is a total pushover. I'm guessing the people on Wall Street are aware of this too. How can they continue to lower interest rates in place of skyrocketing inflation and enormous deficit spending? Where is the money for a tax break going to come from?
They might think they are being reassuring here, but chasing bad money with good money isn't going to prop things up. Something has got to give here, and I'm guessing it's going to be the American economy.
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Real Income overall is down
4%/year every year since 2001. Smart people have adjusted to this already and are just waiting for the bottom to fall out. If I can get my credit card load down 50% then I'm good to go. Everything's in cash or near cash, the mortgage is 4.7% fixed 20 year (15 remaining). One car is paid off. All kids are or will be instate public university students. Second home/condo purchased for cash.
I'm 100% sure my Fortune 50 employer will for the 5th year in a row cancel annual increases and bonuses. Benefits costs have increased 15-17% per year every year while the benefits themselves get weaker and thinner. Plus the stock is down 35% since 2001. My CEO makes about 45 million per year.
By the way, last year (CY 2007) Wall St. paid out 69 billion dollars in compensation, 39 billion of which was bonus money. Now that's a sweet gig.
I fully expect to work until I drop in the harness. I believe my parents generation will be an historical anomaly in that no one before or after will retire the way they could. And by the time I'm that old the US will, economically be a 2nd tier country or worse so it really won't matter where I live: South America is a good option.
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The fate of the welfare/warfare state awaits the same fate as every other Empire
Spending a trillion dollars overseas to "protect America" and "spread Democracy" while both collapse at home because the Empire went bankrupt inflating the currency to feed the greed of the Military Industrial Complex and the Banksters.
It's a simple lesson that goes back all the way to the time man ditched the gathering lifestyle and planted a seed: You reap what you sow. Cavemen understood it better than we do, but then again a caveman couldn't tell you who the Biggest Loser was or what guys Lindsey Lohan has had sex with.
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I suspect
that shrub and the gopers will do everything they can to avert a pre-election meltdown - including things they really don't want to do. Anything to keep from bringing about the election of Dems running on a platform of a New Deal.
I publish real estate and other business pubs. Most of my clients are realtors and builders, and most are repubs. If I had a nickel for every one of them who has said to me in the last year - "I'm a republican but...I'll vote for a democrat if he can stop the crashing, even Clinton" - I could retire. And the housing meltdown causes meltdowns in other industries - similar to the way diabetes causes other diseases in the body.
I am on my county's democratic committee. We have two sitting repub representatives who have, before now, been pretty much untouchable. I've been working with their challengers to craft rhetoric to highlight the gopers unwillingness to address the meltdown in housing. In my area, we are seeing so many businesses close and so many people lose their jobs. Voter registration is up. People are scared and pissed. I hope it is a recipe for a New Deal.
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"There is no terror in the bang, only in the anticipation of it."
Okay already. Let's just get this recession on so we can move on to other things--like who will win American Idol.
I, for one, am tired of hearing the press babble about it. "Will there be a recession in 2008." "Are we heading into a recession?" I don't know and neither do you. Maybe we will and maybe we won't. It won't be the end of the world. It's called the business cycle folks, and it's been happening for centuries.
Recently, the R word has bandied about with increasing frequency--and most predictions have proved to be wrong. Obviously, if you run around predicting a recession long enough, eventually you'll be right.
I do worry about the press's influence, though, and its ability to actually shape perception, and therefore (sometimes) reality.