The Problem with Republicans in Washington, D.C.
Wall Street has been busy focusing on companies' quarterly numbers and the developments in Washington. Now, investors are faced with finding less obvious answers to the question "What's next?"
Any jitters about what might be the next major bit of news to drive the market could extend the back-and-forth trading seen in the nearly three months since the Standard & Poor's 500 index finished at an 11-year low Nov. 20.
Stocks fell sharply last week to end at their lowest levels since November as investors factored in the stimulus bill and looked to other uncertainties about the economy.
If we set aside the inane quality of most financial news stories that are usually nothing but a conventional boilerplate about the day's financial news, this sounds like restless herd behavior, like people looking to other people for leadership. Today, there is no leadership in the private sector.
I'm going to add another somewhat unnoticed factor: there are still a lot of investors out there, usually elderly, who have no clue how much the economy and the markets have changed. I know investors who have no computer or no internet connection who are still doing everything themselves. Instead of continuing to invest in the stock market as they have been doing, it's obvious they should have been putting everything into CDs in the last year. The point is not whether the market will go down further—it easily could—but that we're in uncharted waters. That doesn't mean, however, that there aren't plenty of facts out there to help figure a few things out. Here's a key point made today by Paul Krugman:
Last week the Federal Reserve released the results of the latest Survey of Consumer Finances, a triennial report on the assets and liabilities of American households. The bottom line is that there has been basically no wealth creation at all since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001.
At one level this should come as no surprise. For most of the last decade America was a nation of borrowers and spenders, not savers. The personal savings rate dropped from 9 percent in the 1980s to 5 percent in the 1990s, to just 0.6 percent from 2005 to 2007, and household debt grew much faster than personal income. Why should we have expected our net worth to go up?
Krugman's point reminds me of my oldest brother who was very pleased a few years back as the value of his home kept rising. That is, until he started thinking about retirement and what he could do with that money. The answer was: not much. The price of everyone else's home was also rising. As long as money kept flowing in from places in Asia, people had the illusion of growing wealth. But it wasn't real. And that is the problem with the Republicans in Washington. Republicans are infatuated with deregulated free market ideology as well as the wheeler dealers who grab headlines. Whatever the free market once meant, it has slowly been transformed over the years into the free-money-for-well-connected-rich-guys market. Loan fraud, ponzi schemes, no-bid contracts and insane bonuses have been the rule in recent years.
Ideally, senators and representatives are sent to Washington to serve the people, not their egos and back pockets. Some Democrats and some Republicans have always been guilty of abuses. In recent years, however, the Republicans have turned self-interest into an art form. They even act indignant when Barney Franks hurts their feelings (all he did last fall was tell it like it is). So let's list the problems with the Republicans:
1. They either fail to acknowledge the enormous crisis we're in or they barely acknowledge it. ("The fundamentals of the economy are sound," said McCain a few months back before taking other erratic positions.)
2. If they acknowledge the crisis, they are unwilling to admit the role that deregulation and lack of oversight has played. And they are still adament, despite evidence to the contrary, that more tax cuts for the rich will turn things around.
3. If they blame anyone, which is always the fallback of authoritarians who finally acknowledge a problem, they blame Democrats, immigrants, poor people, low income home buyers or messengers like George Soros. Republicans are emotionally invested in policies that have failed. They cling to those policies despite their obvious failures. Republicans once prided themselves as the party of pragmatists but they are pragmatists no more.
4. There is nothing clever about tax cuts but Republicans are obsessed with them despite obvious issues. Tax cuts do not pave our highways. They do not educate our kids. They do not provide alternative energy. They do not fund unbiased pure research that can lead to new solutions. Take out 'tax cuts' and put in 'corporations' and not much has improved (don't get me going on privatized roads and schools which are usually a fiasco; actually, just look at Iraq). Corporations of this era rarely care about the public interest. That is what we, the American people, have allowed them to become.
5. Now here's the bottom line and I can't emphasize this enough. If the so-called big brains who lead the Republican favor doing something about the American economy, it's generally in the direction of turning the United States into a third world economy. These are the same clowns who thought the neoconservatives had something intelligent to say about foreign policy.
It can be argued with good reason that our country does best when we have a two-party system. But we have a problem. One of those parties, at least at the national level, has become totally dysfunctional. It has no solutions and it has no ideas. It doesn't even have a clear understanding of what is going on in the world. The right wing side of the Republican Party still has money and it still has big mouths. And it seems committed to doing everything it can to obstruct any effort that might address our problems.
The forty percent of the Republican Party that is not right wing has some thinking to do. The only way to shut down nonsense from the Republican right wing is to put them out of business. The only way to do that is for the more sane, pragmatic side of the Republican Party to refrain from aiding and abetting fools who thought Bush was a great president. More important, it would help to stop paying the salaries of right wingers whether they're in Congress or in think tanks. Those who are not Democrats need to think long and hard about how to rebuild a viable second party. By the way, the 'base' is not as stupid or as difficult to reach as some seem to think. Despite the phony bipartisanship calls of the Republicans while they obstructed any meaningful discussion of the crisis we're in, we still need people to come together to some extent in our country—that includes at least some of 'the base'—while having real dialogue based on real facts with some serious thought about the enormous problems facing all of us. The United States is in crisis and too many people either do not want to deal with that fact or they want to play games for their own self-interest.
The American people quite literally cannot afford another George W. Bush, nor can they afford the Republican Party as it now exists. The Democrats, no doubt, could use an opposition but that opposition needs to be based on real ideas, without scapegoats, and with a reasonable understanding of where we are.
I didn't ask for Bush to be a failed president. The fact is that his failures have cost me money. Those failures have cost nearly everyone I know. Now I still think it's possible to dig our way out. I certainly hope so. I know it's possible that we have become the Titanic and that we have hit the iceberg of our own complacency. It certainly seems the rich, with their huge bonuses, are already sailing away from the Titanic in their fancy yachts. That wouldn't leave much for the rest of us except for the balloons from the party Republicans have been throwing for 28 years. Those balloons, of course, wouldn't help much. They would be too full of Republican hot air. Not too useful if we had to jump in the cold water.
It will take more than Barack Obama to turn our economy around and deal with our other issues. But I will say this: every American better hope President Obama succeeds.