Reading the American Economy
No, I'm not an economist. Reading the economy is dangerous business these days and may depend on an ability to read George W. Bush's next reckless move. I suppose if I wanted to invest in a few oil companies, it would be lucrative to be a fly on the wall at the White House about 24 hours before Bush decides to threaten Iran; it would be the ultimate insider knowledge. In 2001, I suppose if I had had any money to invest back then, I should have looked up the corporations investing the most money in Bush's campaign; then again, I would have lost my shirt on Enron stock. Maybe the real key would have been to find out which companies Cheney and Rumsfeld invest in since they are after all the ones who seem to be running the country.
Now in 2004, I thought the economy would slip because of Bush's flawed policies and huge deficits. I was wrong. I completely underestimated how much damage Bush could do to the economy without most of the nation having serious enough doubts about Bush to ignore his fear-mongering for fifteen minutes in the poll booth.
With record oil prices climbing into the stratosphere, I was sure the stock market would finally react. Nope. The reality disconnect continued. Or did it? Increasingly, one reads stories that there are two economies in the United States these days: the corporate world with $100 million parachutes for executives and then, the rest of us. The rest of us are divided into two groups: workers and consumers. Now a few people have started noticing that workers and consumers are generally the same people. Worker wages are stagnant but many people can still to afford to buy things because, miracle of miracles, they have a credit card and, if they own a home, oversea investors are ensuring record profits. Of course, some day the creditors are coming but that doesn't seem to worry the stock market which after all consists of corporations buying whatever is left in America that is still worth buying. In the end, for those lucky few tied into the Bush personal wealth enrichment program, the system works rather well.
Now I keep half-joking about all this in this post because I'm losing sight on exactly what it is these days that sustains the American economy, or at least the stock market? And I keep wondering what happens if Bush is truly crazy enough to attack Iran 10 to 15 years before they have a bomb? I mean, the preemptive strike principle was exercised in Iraq and that turned out to be a fiasco. Now some right wingers are talking about a preeeeeeeemptive strike in hopes that will somehow restore their lost credibility. And I keep wondering, just how indestructible is the stock market?
A few days of losses in the stock markets doesn't mean much. And yet, I have this weird vision of our right wing president in his last year of office nationalizing our oil companies, farms, logging companies, mining companies and so on because that would be the only thing left for him to do to keep Asian investors from owning everything in America.
Okay, it's only a bad week on Wall Street and I'm not even a lousy economist, but this story in The Los Angeles Times may be something of an overdue reality check if it starts getting repeated too often:
Someone please assure me that the Fed officials mentioned in the paragraph above are not, repeat, are not Bush cronies. This country can't afford any more surprises.
Now in 2004, I thought the economy would slip because of Bush's flawed policies and huge deficits. I was wrong. I completely underestimated how much damage Bush could do to the economy without most of the nation having serious enough doubts about Bush to ignore his fear-mongering for fifteen minutes in the poll booth.
With record oil prices climbing into the stratosphere, I was sure the stock market would finally react. Nope. The reality disconnect continued. Or did it? Increasingly, one reads stories that there are two economies in the United States these days: the corporate world with $100 million parachutes for executives and then, the rest of us. The rest of us are divided into two groups: workers and consumers. Now a few people have started noticing that workers and consumers are generally the same people. Worker wages are stagnant but many people can still to afford to buy things because, miracle of miracles, they have a credit card and, if they own a home, oversea investors are ensuring record profits. Of course, some day the creditors are coming but that doesn't seem to worry the stock market which after all consists of corporations buying whatever is left in America that is still worth buying. In the end, for those lucky few tied into the Bush personal wealth enrichment program, the system works rather well.
Now I keep half-joking about all this in this post because I'm losing sight on exactly what it is these days that sustains the American economy, or at least the stock market? And I keep wondering what happens if Bush is truly crazy enough to attack Iran 10 to 15 years before they have a bomb? I mean, the preemptive strike principle was exercised in Iraq and that turned out to be a fiasco. Now some right wingers are talking about a preeeeeeeemptive strike in hopes that will somehow restore their lost credibility. And I keep wondering, just how indestructible is the stock market?
A few days of losses in the stock markets doesn't mean much. And yet, I have this weird vision of our right wing president in his last year of office nationalizing our oil companies, farms, logging companies, mining companies and so on because that would be the only thing left for him to do to keep Asian investors from owning everything in America.
Okay, it's only a bad week on Wall Street and I'm not even a lousy economist, but this story in The Los Angeles Times may be something of an overdue reality check if it starts getting repeated too often:
Stocks plunged today as a worse-than-expected inflation report fueled fears that the Federal Reserve would continue to push interest rates higher — perhaps enough to risk a recession.
The markets' sudden turmoil is shaping up to be the first major test faced by new Fed Chairman Ben S. Bernanke.
In a broad sell-off, the Dow Jones industrial average dived 214.28 points, or 1.9%, to 11,205.61, the biggest one-day decline since March 2003.
The technology-heavy Nasdaq composite index lost 33.33 points, or 1.5%, to 2,195.80, wiping out the last of its year-to-date gains. Markets also plunged abroad.
Falling stock prices and rising bond yields are posing a challenge to Bernanke, some analysts said. The markets are, in effect, questioning his credibility as an inflation-fighter, they said.
"Bernanke's difficulty is not that we don't think he's got what it takes. It's just that we haven't seen it in action," said Christopher Low, economist at FTN Financial in New York.
The trigger for today's market slump was the government's report that the core U.S. consumer price index rose 0.3% in April, higher than the 0.2% Wall Street largely had expected. The core index strips out food and energy prices.
Many Fed officials have continued to declare in recent months that inflation was "contained," despite the surge in energy costs over the last year....
Someone please assure me that the Fed officials mentioned in the paragraph above are not, repeat, are not Bush cronies. This country can't afford any more surprises.
posted by Craig at 10:50 PM
1 Comments:
I'd like to know to what extent the slide downward is the result of hedge fund sharp operators' machinations.
Our economy is becoming more of a Potempkin-Village sham with each passing quarter.
For one example, take the much-vaunted gains in productivity. Dumping people in favor of machines, shedding benefit programs and shirking pension plan responsibilities, propelling the race to the bottom with manic outsourcing and offshoring, our corporate chieftans are hollowing out our productive capacity even as they make the short-term bottom line look good. Oh yes, and even as they fatten their own bank accounts by the tens of millions.
We have too few people designing and making things people here and abroad need and want to buy. We have too many people just making money on money. (I heard on the radio today the financial industry over three decades went from being 8 percent of GDP to being 20 percent, at the same time manufacturing declined precipitously.)
All that would be bad enough if we were financing our own folly, but of course we're not. We're in hock up to our eyeballs to a long list of nations, many of which don't hold a bright, strong and prosperous American future among their highest priorities.
The short of it is that, every bit as much as in the late 1920s, we're way the hell out of touch with the reality of our situation. Nack then we were just playing with dynamite. Everything's larger-scale now, so we're currently playing with the economic equivalent of nuclear weapons.
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