"The fundamentals of the economy are strong.
— John McCain, Sept. 16, 2008
"The economy is fundamentally sound."
— Herbert Hoover, October 1931
Gotta love them Republicans! They're good for a million laffs, at least if you have a few million bucks.Unfortunately, both parties are pretty much a bad joke these days, as we slide into the abyss. Here's the truth: Our economy is teetering on the point of collapse. Nobody is telling you the full truth about that — not the media, not the candidates for president.
Frankly, I am hesitant to say anything about it, because I am writing these words last Sunday night, and by the time you read them, who knows what the situation will be?
We do know this. Last week our economic system came perilously close to something like a meltdown, and that is no exaggeration. Economists agree that this is the worst financial crisis since the Great Depression, which devastated this country, and was ended only by World War II.
During last week's market crash we saw one major financial house collapse (Lehman Bros.), another being bought and taken over (Merrill Lynch), and a third being bailed out for billions by the federal government (American Insurance Group). This was all just the tip of the time bomb, and despite McCain's mindless mumblings, everyone knew things were likely to get even worse.
Then the most powerful economic figure in the nation, Federal Reserve Chairman Ben Bernanke, picked up the phone and called the second most powerful one, Henry Paulson, secretary of the Treasury. Both are deeply conservative guys, and during that phone call, they decided to commit this nation to a form of socialism.
Yes, you heard correctly. Socialism not for you and me, comrades, but for reckless firms that lent money carelessly, and for imprudent citizens who signed up for — or got suckered into — mortgages they couldn't afford. Our leaders decided the government should buy up and bail out all of America's bad mortgages, and pass the burden — we are talking maybe a trillion dollars or more here — on to us and future generations. What the Bush Administration now wants is for Congress to give the Treasury Department the authority to buy $700 billion in bad and failed "mortgage-related assets" from financial institutions.
We are rewarding reckless failure, in other words. A few old stalwarts who believed Dubya's earlier bullshit about free markets were even willing to recognize that he had betrayed them.
"The free market for all intents and purposes is dead in America," said U.S. Sen. Jim Bunning (R-Ky.) who, as an economist, is a pretty fair washed-up former baseball pitcher.
Yeah, well, he has a point, but if he keeps his old cap on maybe it won't show. The alternative was a new depression. Not that this has been avoided for sure.
When the Great Depression began, with the stock market crash of 1929, there were efforts made to stop it, to shore up the market, by the government and major private investors. Some of the things they tried worked, for a day or two, and then the slide continued. That doesn't mean a new depression is inevitable, though the long-term economic trends look very scary. However, what nobody is really talking about is this: Who will pay for this massive federal bailout of the collapsing mortgage industry?
That's easier to answer:
You, that's who. That is, if you are working, or will be working. The average American is about to pay thousands of dollars to help bail out big investors who made very poor decisions. Thousands, and maybe much more. We've been spending without paying for many years.
Imagine that you sent away for all the credit cards you are routinely offered in the mail. When they arrive, you start charging. When the bills come due, you borrow more to meet the minimum payment ... until one day you can no longer get any more credit, or meet your obligations.
That day is arriving now. What this means is not only are taxes going to go up, one way or another, but a new round of high inflation may be coming in a very few years. That's certain to be true if the Federal Reserve merely prints more money to cover the assets it is sending into the economy.
Questions ought to be asked about the bill they are about to shove through Congress authorizing this biggest bailout in history. Mark Dobias, an uncommonly smart lawyer in Marquette, telegraphed me that the proposed bailout "is like the prosecutor setting bail at the behest of a defendant who knows that the bail conditions will be violated. And the crime victim gets to put up the dough," meaning the poor taxpayer, who is being raped again.
Yes, questions ought to be asked, but probably won't be. You see, anyone who tries to slow down this rush to borrow is likely to be called every name, as the saying goes, but a child of God. How dare anyone get in the way of saving people's homes, and saving the institutions that recklessly granted these loans? Even Barack Obama isn't pointing out the truth — that even if this works, it is going to involve a lot of pain for everyone. Incredibly, he and McCain are each still talking about granting massive tax cuts.
The federal government was running big deficits before this latest crisis. Those deficits are about to get a lot bigger. Tax cuts make no sense, and there will be less money than ever to pay for them. But the candidates know that the surest kiss of death for anyone running for president is simply to tell the truth.
Slow death of the Free Press: Paul Anger, the Gannett stooge sent in to run, as in ruin, this once-great newspaper, held a staff meeting last week to announce further "consolidations" in the newsroom that will mean less and less journalism.
You can read the entire memo in former Free Press staffer Joel Thurtell's column, joelontheroad.com, under the marvelously apt headline, "The Art of Writing Bullshit."
One of the most notable changes announced is that Stephen Henderson, who has written especially good and incisive columns about the city's crisis, will become editorial page editor. Nothing wrong with that. But what's most disturbing is that Ron Dzwonkowski, the current occupant of that job, will be marginalized. He is going to be shoved off into a side pocket, told to write a weekly column, blog, and do some editing from time to time.
During a staff meeting that one Freepster told me left most people "more cynical than ever," Anger also fueled the hints that the paper may eventually become a tabloid, saying they may be "killing fewer trees." He also, incredibly, said there had been discussions about possibly getting along without the Associated Press. (The Free Press already dropped other services, including The New York Times.) After Anger explained how they were further diminishing the paper, he asked staffers not to talk about it to outsiders because "it doesn't help, it can give comfort or ideas to the enemy."
Not to worry, Paul. As much as they all despise you — and they do — none of your remaining slaves would even dream of it.Jack Lessenberry opines weekly for Metro Times. Contact him at [email protected]