Tuesday, August 11, 2009

Recession? What Recession???

Recession? What recession? The recession ended last fall, the minute all those Wall Street millionaires taking their sabbatical in Washington gave themselves that miniscule $700 billion bailout during the final days of the neo-con gang and then grabbed a couple trillion more from front-man Obama. As for you unemployed folks on Main Street, well, you're not "in recession;" you're just doing what the poor have always done: coughing up.

Federal bailout inspector Neil Barofsky has warned in testimony to Congress that the total bailout commitment our politicians have made on behalf of the American people may amount to a maximum, in the worst case, of $24 trillion, an idiotic sum. Treasury assures the American people that as of today the figure is only $2 trillion, i.e., about equal to the total US GDP this year. No one knows exactly because everyone is working as hard as possible to keep everyone else from finding out. Also, while it will almost certainly end up worse than Treasury’s optimistic “so far,” if the economy recovers smartly and honest recipients of Washington’s generosity pay the government back, then the theoretical $24 trillion figure will not be reached. Now, I trust you all feel good and will go out and spend…spend…spend!

One of the most serious themes in Barofsky’s orchestra of doom came from Treasury: its rush to undercut Barofsky—who is charged with inspecting Treasury’s behavior—should make all you patriotic, respectful citizens who love and trust your government think twice.

Beyond that, of course, lie all sorts of other issues. In a country that needs to add some 125,000 employees per month just to break even, 250,000 jobs were lost in July…and it was treated as good news!

The next curiosity was the drop in the size of the workforce. All the wars of the ruling elite are not yet sufficiently severe to achieve this, so either people suddenly stopped having babies (a good idea, given the state of things, perhaps, but not one yet known to have occurred) or healthy unemployed workers are giving up on getting employment. If they are fixing up the tent cities or otherwise engaged in useful work, that’s fine, but something tells me this growing army of the healthy unemployed probably represents a net loss of national productivity and happy citizens.

Then there’s that limitless taxpayer-funded safety net for irresponsible Wall Street financial gamblers…well, they aren’t gambling any more, are they? As always, when they speculate and win, they keep their profits; but now, when they speculate and lose, they get refunds from the taxpayers. (Yes, the same taxpayers that may have invested their money on Wall Street in the first place; your subsidies do not pay you back – they just pay back Goldman Sachs.) Most of you probably don’t know that the U.S. actually has a senator who is not a member of either the Republican or Democratic branch of the Conservative (i.e., Money/War) Party that rules this country: Independent Bernie Sanders of Vermont. Here’s his take on Wall St./Washington corruption:

Stepping up a campaign for Federal Reserve accountability, Sen. Bernie Sanders on Wednesday questioned whether some of more than $2.2 trillion in secret subsidies went to Goldman Sachs and other bailed-out banks now planning to shower executives with huge bonuses. Sanders voiced his concern in a letter to Fed Chairman Ben Bernanke and Treasury Secretary Timothy F. Geithner and during remarks at an Economic Policy Institute conference. Goldman Sachs yesterday reported that its profits surged on second-quarter income of $3.44 billion. The turnaround came less than a year after reckless investments by Goldman and other Wall Street firms triggered a worldwide recession and drove many rivals out of business.

With the good times rolling again on Wall Street, Goldman repaid its $10 billion taxpayer bailout and now plans to dole out the biggest bonuses in its 140-year history. The investment bank reportedly plans to pay as much as $20 billion this year in bonuses and other compensation, about $700,000 per employee. Goldman is one of 10 big banks that announced plans to return bailout funds so they could evade restrictions on executive compensation and bonuses.

“The question I have is how do we know that right after Goldman and other banks pay back billions to the Treasury, the Federal Reserve doesn’t turn around and provide them with billions more with no strings attached?” Sanders asked. “The answer is that we don’t know. Ben Bernanke refuses to say.”

That's good politics, I suppose, but surely Sanders understands the real issue is two-fold:

1) the continuing lack of transparency both on Wall Street and in Washington;
2) the "moral hazard" problem - bailing out the crooks (or, perhaps, just idiots) who caused the recession without punishing them simply rewards them for their criminally irresponsible behavior and ensures that it will be repeated.

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