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Oh, my, what have we done?
If one was to ask several people who've written to The Contra Costa Times, we've elected a "Marxist" the likes of which this nation hasn't seen since the administration of Franklin Delano Roosevelt. Furthermore, the policies which our new commie president has promised will worsen our economic crisis, will turn it into a depression and will only be able to be righted by starting a world war.
When FDR took office in 1933,10,000 banks had collapsed, 25% of American workers were unemployed and people were fighting over scraps of food. No matter how much people want to blame The Depression on FDR's "hackneyed policies", it's obvious that The Depression had a pretty good start before he took office.
In October of 2008, three months before Barack Obama is to take office, Americans lost 240,000 jobs and in November, just two months before the inauguration, Americans lost over 500,000 jobs. If "the inevitability of disaster permeates Obama's administration," those 740,000 jobs create a good prelude to that disaster.
When the Stock Market crashed in 1929, stock prices were set based upon the fact that they'd been rising. Since they were rising, investors thought that they'd keep rising and, according to the laws of supply and demand, demand for the stocks rose and so did the prices.
This sounds crazy and like a risky business, doesn't it? What if something happened to make the stocks worth less? Those hopeful investors would be investing in air. What happened to make the stocks worth less and, eventually, worthless, is that the investors suddenly noticed that nothing was backing up the stocks save for their illusory worth. As one would imagine, this brought on a landslide of selling and the industries to which the stocks were linked began to fail.
This may be an oversimplified explanation of The Great Depression, a very complex issue. Yet, believe or not, Barack Obama is inheriting an economic crisis caused in part by a similar fantasy engaged in by wealthy Wall Street traders. This fantasy is called "derivatives". What are derivatives?
Derivatives are financial instruments which bet on the success of other financial instruments.
For example, the bank wagers on the ability of a person to pay his mortgage. Traders then come along and bet that the bet placed by the bank will be successful. Traders then come along once again and place a bet on the bet placed by the first traders who, of course, bet on the success of the bank loan.
Ultimately, traders are betting on "air". There's really nothing to back up their "bets". Sound familiar?
One source of proof that the traders are betting on "air" comes from The Bank of International Settlements. The BIS reported that the total of the outstanding "bets" or derivatives is $516 trillion. To put this in perspective, the Gross Domestic Product for all of the nations in the world, combined, is $50 trillion. In other words, there's not even enough money in the world at present to back up the total of the derivatives waiting for a "payoff". Obviously, since there's really not enough money or worth in the entire world for every bet that's out there to be a successful bet, something will have to give.
Yet, the writers of the letters that I've referred to want to preemptively blame the present financial crisis on the "bungling and corruption of the Democrat (sic) Congress" which was elected in 2006, the "64 million groupies" who voted for Obama and on "Messiah Obama" himself and his "socialist agenda".
As mentioned, the cause of The Great Depression and what got us out of it is far too complex to be sufficiently explained in a brief column like this one and by a person such yours truly, a person who is far from being an economic expert. However, as was the case before and at the time FDR took office, the economic situation is set up for failure as Barack Obama and his administration are set to take office.
This failure was caused by a government who believes that government should not govern. The Regime, and this goes back to Reagan and includes H. W. Bush and, yes, Clinton, believes that government should not regulate the "free market". As with most Libertarians, The Regime believes that the "free market" will regulate itself.
Although the "free market" has the power to regulate itself, we must never forget that the "free market" is predominantly controlled by people who are like kids in a candy store knocking each other over to get the most candy, even though they know they'll never be able to eat it all. And who suffers for this greed? The middle and lower classes of Americans suffer.
I'm also very cynical about the one party, two division political system we have in the US. However, Obama and his administration are all we have and I'm willing to sit back and see if I'm wrong about The Corporacracy in general or even if I'm wrong about the relationship that Barack Obama will have with The Corporacracy.
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