Deciphering an Economic Maelstrom
Posted on | February 2, 2009 | No Comments
“…the Labor Department said the number of first-time jobless benefit claims jumped to a seasonally adjusted 589,000 in the week ended Jan. 17…”
“…new data from the Commerce Department showed the housing market continued to weaken in December. Construction of new homes and apartments plunged to an all-time low annual rate of 550,000 units last month.”
Fed Vice Chair Donald Kohn stated, in a preliminary hearing, that the Fed has now loaned somewhere closer to $2 trillion dollars rather than the $1.2 trillion thought to be spent. And, he goes on to state that he cannot divulge where that money has gone or to whom it has gone.
What we have in these three separate accounts of the economic turmoil gripping the U.S. is a perfect storm of disaster. None of these stories are new and that is both disturbing in the fact of its wide public acceptance and more disturbing in the lack of expediency to rectify these crises. Let’s not mince words here; either the stupidest people in the country are now in charge of the government, big banks, big corporations, and the biggest educational institutes or they have conspired to ruin the economy for their own greed. Of course, being both stupid and greedy is not out of the question
To further examine the situation we can see that the banks and others’ “too big to fail” are receiving more money, as the economy worsens, that will never be fully recovered or accounted for. In the meantime, 2.6 million jobs were shed in 2008, foreclosures are continuing to rise, and more businesses are getting in line for bailout money. A second wave of foreclosures is predicted for prime mortgage loans in 2009 and the credit card industry may collapse. It doesn’t take a genius to see that the recovery plan or lack therein, has no teeth and no defined direction.
The financial sector is like a heroin addict that needs a fix and it’s time to put this addict into rehab. Sarbanes-Oxley and other such measures are direly needed to monitor the activities of these out-of-control economy killers. Businesses can no longer use debt as a tool for increasing their bottom lines. The government cannot stand idly by and allow financial institutions and big corporations police themselves. The pendulum must swing the other way or democracy becomes a failure. If this is capitalism then it is not working.
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