I know I can get into a negative vein, but I think I'm mostly an optimist, so I hope you understand that it's not that I'm naturally a doomsayer, and the truth is I've been surprised before.
One of my greatest surprises was when the US emerged from the oil shocks and inflation of the seventies seemingly unscathed. I had expected some serious repercussions that didn't materialize. I wonder if there isn't a similarity to today, in that, business and the economy went on as if nothing was really wrong. With this latest bust of '08, it was the new Obama administration's allowing the banks to say the value of the properties on their books was whatever the banks said it was. They did not have to "mark to market", or value the properties at the actual market price. When this was announced the Dow stopped it's descent toward below 7000 and went back to over 11,000. And tens of millions of 401(k) owners heaved a sigh of relief that they regained fifty percent of what they'd lost. Question: where'd the other fifty percent go? is it important?
This "stabilized" the banking industry. They'd been infused with $750B from the Treasury (borrowed by the government, mind you). This is well known, the infamous "bailouts." What's not as well known is that the Fed infused the banks with around six trillion dollars, according to some. The whole exercise was so the banks had cash to lend to business (there's a valid need for this.) The problem of the last year and a half was that the banks tightened their lending, contrary to the stated purpose of the bailout. Yet, over that period commercial banks have bought $1.5 trillion in Treasury bonds. It's a matter of where they chose to put the money. At the same time, it is reported that companies are sitting on about $1.8 trillion dollars in cash on hand and are not spending it or growing their business and adding new jobs. Meanwhile, unemployment hovers around ten percent (officially, unoffically around twenty). Honestly, given these facts, one could make a case that business leaders are deliberately negatively affecting the economy. At a minimum, given the horrendous state of the economy for most people, it absolutely shows how what is called supply side economics, or neoconservatism or Reaganism is absolutely wrong. It's not even, in the words of a President of the United States, voodoo economics, it's just wrong.
Yet this idea is what drives economic discussion today. While the Neo-cons, and Randians, and other conservative ilk debate their ivory tower folderol, Rome burns. And the fire is in our part of town.
