Financial Mismanagement Buttressed With Lies
"Opinion"02/28/2007
Financial Mismanagement Buttressed With Lies
Paul Munnis
It’s getting so that whenever the White House says something then you can bet they are lying to you. So when they start bragging about the great performance of the Bush economy you know the news is not good.
We have a slow-down in China growth certainly not the fault of the Bush Administration, we have trouble in or equity markets and that is a Bush macro economic failure, and we have rising gas prices and that too is a Bush macro economic problem.
American workers are not seeing their wages rise and are thus faced with rising inflationary costs on everything from food, to clothing, to shelter, to mortgage rates, to gas prices, to transportation affordability, to rising insurance prices, and to health care costs. Good jobs are not being created at a fast enough rate and so consumers are cutting back on unneeded consumption and that is contracting our economy. The response of a contracting economy is job layoffs.
Here’s more understanding of the problem in a nutshell”.
For decades, consumers have been spending like there’s no tomorrow, while real estate prices, stocks, and commodities have reached ever — greater heights.
Despite the 2001 stock market fall, it seemed like just about everyone was becoming “paper millionaires” thanks to the real estate boom, and the easiest money this country has ever seen.
But in 2006 the tide began to turn, with real estate prices tumbling nationwide, and interest rates starting to move sharply up.
2006 was also the year that many Americans began to wake up and to realize that while everything looked rosy on paper, enormous hidden “stealth inflation” was ravaging their savings and eroding their purchasing power.
However, what most Americans have yet to realize is that decades of “easy money” have not only created an illusory “pseudo-affluence”, it also threatens our entire economy and has left financial authorities with nothing but bad alternatives:
On the one hand, the Federal Reserve, needs to keep pumping more money into the economy and keep interest rates low, to keep the financial party going. On the other hand, low interest rates and enormous hidden inflation have been steadily eroding the purchasing power of the dollar, causing foreign investors to slowly but steadily abandon the dollar.
Today, our economy is balanced on a knife’s edge: If the Fed keeps stealth inflation high and keeps interest rates artificially low, foreign investors who hold trillions of our debt, will accelerate their dumping of the dollar, threatening to destroy the dollar and plunging our economy into recession.
However, if the Fed stops printing money and increases interest rates, it will be disastrous for businesses, families, and every level of government, which have accumulated enormous debt.
The financial situation today is so precarious that even a small change could push our economy over the edge. Even doing nothing could mean a major recession in 2007.
All of that mess is the direct and undisputable failure of the Bush taxation and labor policies. Add to it fewer and more expensive Chinese goods and you can see that yet another inflation round is coming for consumers. The George Bush, Sr., Administration was marked by hyper-inflation and G.W., Jr., is emulating him.
Bush has been devaluing the dollar. It is down by more than 50% since he took office and is going to have to be further devalued. The market correction mechanism for a devalued dollar is price increases – hence stealth inflation -- will come back even stronger than ever.
Last week Mr. Alan Greenspan came out from his retirement to caution us. Yesterday the market tanked. The White House said: not to worry it’s a normal market correction. Today, Mr. Bernanke will come out to reassure all of us that all is really well, a regular part of his job description to support Bush these days. Our State forecasts are for recession too. So all is not well, we all know it, and we are damned sick of being lied to about it.
It is no consolation to see Bush messing up. It is hurting America and it is creating bad messes for Democrats to clean up behind this guy. He needs to wear a diaper or to step down.