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There is a strange lull in our present economic recession wherein the Administration's economic advisors are saying that the worst is over while consumers are beginning to feel the leading edge of a major depression: Allen L Roland
The current cheer leading by some economic leaders, that the worst is probably over, sounds vaguely hollow in light of a Wall Street top down stimulus package that left out Main Street consumers ~ who paid for this massive infusion of capital and who increasingly want their money back.
William Greider, The nation, calls it Wall Street's False Armistice ~ " The best names in Wall Street banking have announced victory. Their crisis is over, back to business as usual. So why isn't the Obama White House celebrating this good news? Because this may not be a lasting peace for the president and his lieutenants. They are left standing in the mud hole of financial ruin, still surrounded by the failing economy and gradually losing their control over events. The leading bankers worked out a rare deal for themselves that essentially says to the government in Washington "heads we win, tails you lose." http://www.thenation.com/doc/20090622/greider2?rel=emailNation
And what about the ticking time bomb of Derivatives ~ the 200 trillion dollar derivative elephant in the room that no one wants to talk about ? Greider asks the same question ~ " Meanwhile, the government has also ducked the explosive question of derivatives ~ the casino-like "credit default swaps" that were very, very profitable for banks like JP Morgan Chase but became the time bomb threatening to blow up the entire system. The time bomb is still ticking. The bankers don't want give up that lucrative business. The Obama officials have not yet found the nerve to go against the bankers' desires."
In other words, Wall Street has been bailed out but Main Street not only paid for it ~ but is evidently expected to reinflate this loosely patched up credit bubble, that recently burst, with renewed consumer spending and debt.
Economist Peter Schiff, famed for being the most vocal financial economist to have perfectly predicted the crash, sums up the major storm that's already hitting our shores ~ "And what's going to happen is that China and Japan are going to stop buying our bonds, and the Fed's going to start buying all the bonds, and the dollar's going to plunge. And this crisis is going to end up being a currency crisis. And when it becomes a currency crisis, then you're going to have higher consumer prices and you're going to have higher interest rates." http://mises.org/story/3493
This ongoing false optimism or wishful thinking by the Obama administration and Wall Street has not gone unnoticed in Europe. Jean-Marc Vittori, writing for France's premier business paper Les Echos, says, "Something like a strange scent of unreality floats over this month of June. While the whole world confronts a deep recession after receiving a colossal financial shock, everything is happening as though that page were already turned."
Vittori makes the correct analogy of having a stroke and not doing anything about it or ignoring the conditions that led up to it ~ " Even though it would be more pleasant to proclaim the crisis over, there is no denying that it is only beginning. Debt is making holes everywhere, in the accounts of companies, individuals and governments. We are acting like a sick person who leaves the hospital just after escaping a heart attack, having changed neither his diet nor his life style, without even having the necessary tests done to determine whether he is still at risk in the short term. We have not learned any lessons from the crisis. At the risk of very soon undergoing a still greater shock." http://www.truthout.org/061109F
Amen !
Allen L Roland http://blogs.salon.com/0002255/2009/06/12.html
