A strong stock market rally a healthy economy does not make. We have witnessed the stock market rally for the past month or more. After hitting a low around 7,000, it is now fluctuating just above 8,000. One might assume that the worst is over and we are well on the road to recovery, thanks to the Obama/Geithner plan. It all sounds so 'West Side Story' sweet, but is the economy really turning around and will it ever go 'back' to the good ol' days?
The root causes for the meltdown have never been examined. Without knowing the problem the chances it of fixing it are remote to nil, unless by some massive aberrant coincidence Geithner just happens to blindly stumble onto the solution. So what is the cause of the current 'rally' in the stock market? No one knows for sure. Financial experts and institutions around the world concede that the 'fundamentals' have not changed; they are still in the dump. With Bloomberg News reporting that nation's top CEO's and board members are dumping their stocks, the question begs, "Is the market being tampered with so that the fat cats can cash out while some value still remains?" Who knows, but the market advances of recent weeks are not justified or explained by the underlying fundamental factors.
One obvious possible cause of this apparent turnaround is the massive amounts of money not only being doled out from our tax dollars to culpable bankers and investment houses, but also the new money being printed at a much higher and faster pace than the bailout monies are being injected into the system. To most Americans these welfare payments to the banks amount to rewarding the idiots who got us here in the first place. But we are told the situation is vastly more complicated than we mere mortals could comprehend and we must save the banks without making them accountable. Milk toast requirements, such as reductions in bonuses and other minor restrictions employed by the Obama administration amount to little more than red tape and baloney applied at random with a shotgun. They do little to correct decades old problems created by both parties, such as systemic deregulation (i.e. assigning the foxes to guard duty over the henhouse) and removal of free trade barriers leaving US workers to compete against wages paid overseas, such as in Vietnam, where labor can be purchased for about two bucks a day, no benefits.
France used a different approach; they fired the top brass at all banks that had to accept government funding to survive. In spite of predictions that this treatment of bankers would be catastrophic, nothing deleterious has happened so far. The French financial markets did not implode, the sky did not fall down, and the people did not change to card-carrying-pinko-socialists.
Another, perhaps more fundamental and powerful reason the markets keep falling is that the unemployment figures keep mounting. What a novel idea! Imagine, rising unemployment adversely affecting the overall economy? But, according to the financial wizards and their congressional hacks, oops, uh, I mean our blessed elected officials, unemployment is not an important factor, it is just a consequence of healthy markets adjusting to new world realities. Since humans exist to serve the economy and not the other way around, what's a little unemployment every so often? Its natural; its 'good for you,' they proclaim.
So Obama's administration, led by the boyish faced Geithner, admittedly a Wall Street insider, is following a 'reward the criminal' approach and pumping greenbacks into the banks and investment houses at rates heretofore never seen or imagined. Adam Smith is rocking and rolling in his grave. Together with generous incentives for these same Wall Street clowns, Geithner's actions are having some effect. But are they succeeding in curing our ills or just postponing the inevitable, as Bush so cleverly did during his term?
The problems we face economically date back to the Reagan years when deregulation got its first steroid prescription. Congress could not pass corporate friendly legislation fast enough. Deregulation became the word of the day, the path to fulfillment, the mantra of every breathing politician and economist, regardless of their political persuasion. We saw the first results of this enlightened economic policy when the Savings and Loan institutions imploded in a vast trillion dollar dust cloud of corruption. But hey, that had nothing at all to do with the new economic re-structuring. Oh yeah and 'don't believe your lying eyes!'
Since then both parties have been busy every single legislative day writing complex new economic laws. Eventually they passed thousands of new laws designed to re-structure the economy on a scale never before witnessed. Keynes was 'out' and Freidman was 'in.' NAFTA was the first of many so called free trade agreements, under which rich elitists and captains of industry were not only allowed, but encouraged to export their capital, their factories and their bank accounts to overseas markets where they could produce at a fraction of the cost of US based production. This cost Americans plenty of good paying jobs, Americans who are still waiting for the trickle down to reach their pocketbooks and doorsteps.
Anti-union and anti-worker laws were passed. Consumer protection was gutted. Environmental protection was burned at the stake. The shackles of common sense were removed from Wall Street, like handing a loaded gun to a trigger happy terrorist on PCP in the middle of an outdoor shopping bazaar brimming full of his arch enemies. The New World Order could just not be hastened quickly enough. The Democrats and Republicans alike were congratulating themselves is gushing tones.
After this orgy of legislative greed our economic system is now perfectly set-up to drain jobs and money out of the US as quickly as possible. It worked very well. By the end of the Bush years the economy responded; it COLLAPSED. So what has Obama done to reverse twenty-eight years of break-neck speed re-structuring? What checks and balances has Obama put in place to stop the flow of wealth from our nation, once the economic leader of the entire 'free' world? What brakes has the boy genius Geithner put in place to slow down our 'race to the bottom?' I'll tell you. NOTHING! Not one single thing has been done to reverse the years of neoconservative and neoliberal overhaul of our economic system. Since an economy is the structure that provides us the resources we need to survive, such as food, shelter, clothing and medical care, this omission is slightly more important than forgetting his pledge to prosecute those who broke the laws by torturing our purported enemies. After all, what good would it do to bring to justice the torturers when vast numbers of Americans are suffering the torture of famine, homelessness, and economic ruin? Economic crimes can be just as deadly as military crimes. In fact, they are often much more deadly.
Instead of getting to the root cause of our illness and applying the right medicine, Obama has taken a page from the pharmaceutical companies; cover up the symptoms and perhaps no one will notice the disease spreading below the surface. Obama and Geithner's plan is nothing more. Blow trillions into the banking system, pay off the perpetrators, and the bubble will re-inflate. On the surface it appears the sickness is being cured. However, the supporting structure remains alive and well, beneath the surface, festering like the plague, waiting to rear its ugly head again only much more virulent the next time. As we all know, masking a problem only allows it to get worse. Treating symptoms may provide temporary relief and to a President mired in a series of global problems (coincidentally all related to the same root causes) it certainly is a very seductive path to temporary victory. It also offers the politically expedient opportunity to take credit for averting a potentially devastating catastrophe. But inflating the US dollar, paying off the crooks by propping up their criminal organizations and failing to address the root causes is a recipe for disaster, an accident waiting to happen, a re-inflation of the same bubble that just burst. It gives excellent cover for the super rich to extract a little more blood money from the markets before the 'big bang' arrives.
After the bubble 're-bursts' confusion and calamity will reign. It will be hard to talk sense over the din and roar of the screaming propaganda that will undoubtedly fill the airwaves urging us to blame one another, splitting us apart, dividing us into small slivers along racial, ethnic and religious lines, just as we have witnessed in Yugoslavia and other nations, victims of the new global corporate oligarchs. When that point is reached, it will be easy for the darkness of fascism to descend upon our nation with little objection or even awareness. And will we ever have our economy restored? Heck no. All we have to do is look at nations like El Salvador, Guatemala and Vietnam to see where we are headed. These nations illustrate the default conditions that follow complete deregulation and abandonment of economic reason and justice. But is anyone taking notice? No. Over sixty percent of Americans approve of Obama's policies, so far. If the polls are correct we have a serious shortage of proctologists to help us locate our upper extremity. We've got a chronic case of belfry in the bowel.