Just who is back from the brink?
If you listen to the Fed, the glass is more than half full; if you listen to economists like Simon Johnson, it's way more than half empty, as he wrote on Baseline Scenario:
"In the absence of effective financial regulation -- i.e., both during the 1920s and again since 1990 -- the Fed has operated in a manner that encourages the formation of sequential bubbles. This destabilization of our financial system is not a minor matter; the damage caused -- human, financial, social -- is already enormous."
"And we are very far from being done.
"Don't take my word for it. Lou Jiwei, the chairman of China's sovereign wealth fund said recently, "It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose."
Yes, We Can ---lose, that is, Mr. Lou. And Yes We Are, Mr. Obama. The problem is that we are still in some Bernanke fantasyland, thinking that if we keep saying everything is ok, it will be.
Here's Washington's blog on real unemployment as opposed to what the Bureau of Labor Statistics is saying:
"" Paul Craig Roberts - former Assistant Secretary of the Treasury and former editor of the Wall Street Journal - and economist John Williams both said in December 2008 that - if the unemployment rate was calculated as it was during the Great Depression - the December 2008 unemployment figure would actually have been 17.5%.
Williams says that unemployment figures for July 2009 rose to 20.6% According to an article summarizing the projections of former International Monetary Fund Chief Economist and Harvard University Economics Professor Kenneth Rogoff and University of Maryland Economics Professor Carmen Reinhart, " unemployment could rise to 22% within the next 4 years or so."
Hello, Mr. President? Why can't you bring to the discussion of the economy the same passion and fact-based arguments that you brought to the health care debate?
Why can't you propose serious reforms on the financial sector? Why can't we jail the financial criminals?
The answer seems to be that Wall Street will be a far more tenacious and resourceful enemy than the health care industry perhaps because they already own much of the Congress.
Remember Senator Dick Durbin's comment, 'the bankers run the place."
Alan Blinder a former vice-chairman of the Fed fears that pressure for financial reform is losing steam in part because of the power of what he calls "The Mother Of All Lobbies." He writes, "in the case of financial reform, the money at stake is mind-boggling amd one financial industry after another will go to the mat to fight any provision that might hurt it."
Obama acknowledged we are not out of the woods yet. (What woods?)But what are the likely consequences? How long can people live without anything coming in? How long can we live on upbeat projections?
"There is no doubt class antagonism is stewing," says the editor of the blog Naked Captalism. He expressed a fear of a reaction that will go way beyond flag-waving tea parties.