There is no doubt that the U.S. and many other economies are facing a downturn. Some blame the huge expenditures for the Iraq war, others the decades of Alan Greenspan’s failed policies.
It appears that at least some of the blame can be laid here, but that cannot be all.
The sub-prime mortgage crisis, and the resultant crash in real estate prices are reminiscent of the S&L crisis of the 1980s and’90s. The ultimate cost of the crisis is estimated to have totaled around $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government. Doesn’t that remind you of the bailout of Bear Stearns? At least the feds declined to bail out Lehman Brothers and Merrill Lynch was taken over by the Bank of America. Why is the U.S. government so directly involved in bailing out corporations, which have in fact contributed to the crisis in the first place?
Frankly, seeing the Wall Street crooks -who have been robbing everybody in sight for a very long time – take the deep plunge into nowhere is somewhat satisfying. Unfortunately, their demise – along with too frequent “golden parachute” multi-million dollar payoffs to the top executives – have caused and continue to cause problems, pain and difficulties not only for their rank and file employees, but also to all of those, who have intentionally, or unknowingly gotten involved with these corporations. The latest news is of course the Fed’s $85-billion loan to AIG, the world’s largest insurer – a company of which few people have ever heard about, but which instantly made the news two days ago, when it announced that it was seeking bankruptcy protection.
For the last six, or so years the lending practices and in particular the sub-prime mortgage industry have been running rampant. Some 60 percent of house loans have been given to people, who’s ability to repay the loans was not even properly checked. I remember distinctly that just a few years ago the applicant’s ability to repay was quite thoroughly vetted. No wonder that an insurer, such as AIG was going under, since practically all lenders insure themselves against the possibility of losses in that regard.
This is not to say that the millions of totally irresponsible people, who have taken out loans that they cannot repay are not complicit in this whole mess as well. To make a long story short, the “free market” and the practically unregulated financial industry have not only buried themselves, but also a great many innocent people, along with our economy, which for some strange reason is so dependent on corporations, which deal almost exclusively in buying, selling and repackaging debt in its many forms. Something is definitely wrong with this picture.
Remember Enron, the havoc and expenses it created with the phony California energy crisis? When that criminal enterprise finally collapsed, the damage was mainly restricted to their employees, investors and ordinary people, who were counting on the artificially inflated Enron stock to fund their retirement. Very few Enron executives were ever properly punished.
We seem to have the same situation with the present banking, investment and Wall Street meltdown. It hasn’t happened because of “bad luck”, or some catastrophic event, but it was engineered, caused and executed by a whole slew of white collar financial criminals, with either an active, or at least a passive assistance of the Bush administration. How can you then expect the U.S. Justice Department to go after the crooks, who after all were playing along with the rules set by the feds? In the meantime, you can be very sure that certain – obviously unspecified people – have gotten very, very rich along the way. The really serious problems started with the Commodity Futures Modernization Act of 2000 or CFMA (H.R. 5660 and S.3283), which in fact removed regulations of all kinds of financial crookery (called “products” by the industry) and which has returned the U.S. stock markets to the days before the 1907 Wall Street crash – in reality to legalized betting, which happens to be illegal outside of Wall Street.
Let’s not forget that over the past few decades, the United States has transformed itself from a manufacturing giant, which dwarfed not only particular countries with its output, but which was the biggest, single manufacturing entity in the entire world, to a client state of China, which manufactures practically everything that we buy here, in the U.S.- on credit, of course.
America is being transformed from an industrial colossus to a tired, post-industrial society. A nation of the rich and super-rich at the top, a mass of poor people on the bottom, and a powerless middle class squeezed in between.
The unhealthy emphasis on the stock market, as if it had any real value, rather than in reality being still another virtual tool for corporations to make money, the lack of concrete foundations of our economy, meaning actual, real, tangible assets – all of these factors, with the added “benefit” of wasting hundreds of billions of dollars so far on the senseless war in Iraq, have contributed to our economic downfall.
Having an economy, which seems so heavily dependent on “housing starts”, consumer confidence index, so-called durable goods purchases, the “success” of Christmas shopping and on the whims of the stock market is not only shaky, but downright unhealthy.
Globalization has not produced the benefits that its proponents have so forcefully shoved down our throats, but a whole slew of new problems and even more money for the few, who are “in the know” and who are often so ineptly and callously manipulating the world’s economy.
Transferring millions of federal government retirements from the Civil Service Retirement System (CSRS), to the Federal Employees Retirement System (FERS) was another criminal move. This switch has deprived the federal employees of a viable retirement option, putting their hard-earned money instead into the highly unstable stock market. Why? That’s kind of obvious. The feds have once again subsidized Wall Street to the tune of many trillions, or even quadrillions of dollars, while screwing everybody else. No surprise there, of course. And the Republicans have tried to convince us that Wall Street should be the trustee of our Social Security system. A trustee?! I’d rather trust a venomous snake, I think.
As of Thursday, September 18, 2008 the Feds, along with Congress are preparing another “rescue” package for banks, brokers and other financial moguls. What does it mean to you? Most likely another subsidy to the tune of hundreds of billions of dollars, in addition to all the other subsidies and gifts that the American taxpayers have been forced by the government to pay to save the fat cat’s asses.
But there are other links too, between the war and US economic crisis and decline.
One is the misdirection of much of the nation’s remaining industrial strength into war production. The late industrial engineer Seymour Melman some time ago demonstrated how the military-industrial complex, by producing things not on a competitive but rather a cost-plus basis, destroys economic competitiveness, sucks up research and development talent and resources, and investment capital, and ends up producing nothing of use either for society or for the national trade account.
In addition, everyone seems so preoccupied with the ever-rising price of energy, oil in particular, but as of late also coal, as if that was the only problem we were facing. Oil has of course been always traded in dollars, which partly because of the never-ending lowering of the prime interest rates by the Fed kept dropping in value. No surprise there, of course. Add the roughly 50 percent markup, caused by speculators and the subsidies for the oil companies and all of a sudden, everybody pays for energy through the nose. In addition, I got news for you: for years the Europeans have been paying as much for gas, as we have been 
paying lately and their economies aren’t collapsing the way ours is. Could it be that the price of oil is not the real culprit, but rather another convenient way of diverting our attention from the actual problems?
Considering all of the above, I would like to once again offer a simplified definition of fascism, which is simply corporate control of the government. Need I say more? Draw your own conclusions and if you love your country, do something about it.
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The U.S. Federal Reserve, also called the U.S. Central Bank only seems to appear in the news, when it lowers, or raises the banking interest rates.
