It seems like ages ago, the US was at peace, there was a budget surplus, the economy was growing, and the unemployment rate was very low. But not everyone was happy. There was an entire group of people who harbor not good, but ill will; an entire class wished for bad times and got it.
Until now, China had an interest in keeping the US ponzi scheme propped up --they sold billions to US citizens via Wal-Mart, the economic Kudzu that ate America. But since a Chinese sub popped up undetected in the middle of the US fifth fleet, it has been apparent that the honeymoon is over. China now leads the world in dumping dollars. Everywhere, it seems, it has become a habit.
If this were mere recession staring back at us from a fun house mirror, it might be shrugged off. After all, the GOP has always loved recessions and benefited from them. A clue is found in the work of conservative Austrian-born economist Joseph Schumpeter who regaled his Harvard students in the mid-1930s with a pithy observation about how economic depressions actually benefit certain social and economic classes.
Chentleman, [sic ] you are vorried about the depression. You should not be. For capitalism, a depression is a good cold douche.
--Joseph Schumpeter, Economist, Harvard University Lecture, circa 1930s
A pattern emerged with the ascension of Ronald Reagan: the rich keep getting richer and the poor keep getting poorer. Unfair tax cuts have a lot to do with that, but, also, the nature of recessions themselves. Everyone who is not an initiate into the cult of gopperism gets douched. The administrations of Reagan, Bush and Bush are like lab experiments that prove the hypothesis: GOP policies are designed to benefit an increatingly tiny elite or, as Bush called it, "my base."
This is no mere recession but complete collapse. Mephistophes has come knocking.
As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.
Asian, Mid East and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed."
The share of foreign buyers ("indirect bidders") plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns.
Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies.
Bush, meanwhile, seems unconcerned, perhaps, like Nero, fiddling as Rome burns. Then again, the GOP 'class' has always benefited from US recessions, depressions, and other economic catastrophes.
Recessions, though not caused by declining stock markets, are always accompanied and often predicted by a plunging stock market. Republicans sell out at the peak, taking their profits. Enough selling will trigger the plunge; less knowledgeable investors begin to follow suit from fear but too late. Last man out loses.
Having taken their profits on the upside, a depressed market is but an opportunity for the rich Republican to get back in at lower prices. Guess who sells at the lower price: the poor schmuck who is 180 degrees out of phase and can only dream of being a rich Republican. In reality, those he aspires to join are exploiting him.
Very knowledgeable investors make money "selling short", buying "put options". These investors get peak prices for stocks even as the price declines. Illegal insider information is executed with "calls" and "puts." The perpetrators of 911, for example, made millions, possibly billions, selling short the stocks of UA and AA. I defy anyone to come up with an 'innocent' explanation. The recipients of those profits had guilty foreknowledge of 911. The name 'Buzz' Krongard comes in connection with a known terrorist organization: the CIA.
Now --a planned financial meltdown might have presented the same opportunities. Historically, 'elites' have always emerged richer, stronger from recessions.
On the other side of Ronald Reagan's recession of some two years, the rich had gotten richer while the middle class was all but wiped out. The ill-effects of that recession are still seen in the decline of middle class neighborhoods, the permanent loss of manufacturing base and the jobs it created.The profits and volume were most certainly outside norms, proof that those executing the options had precise foreknowledge of the attacks. Those making those profits had "guilty knowledge" of the attacks; they were at the very heart of a murderous conspiracy.
Unemployment always goes up in a recession. At the end of a longer recession, companies have the luxury of hiring from a larger labor pool at lower wages and/or salaries. Some companies --citing hard times --may reduce benefits, cut vacation or sick time.
Big business must hate good times; it is only during times of full employment that workers have any leverage at all. Offhand I can think of only two times in history that have come close: the Clinton years, and, interestingly, Europe after the Black Death. The labor supply had been depleted by plague. Employers were often forced to accede to worker demands for better conditions, money, a place to live! Serfs had been freed and it marked the beginning of the end for Feudalism and set the stage for 'corporate feudalism', an age in which we still labor and suffer.
Admittedly, many businesses go belly-up during recessions. While lip service is given to 'free markets' and Adam Smith's 'invisible hand', die hard robber barons hate the 'free market'. They prefer 'monopoly' when they can create one and 'oligopoly' when they can't. Free competition among many sellers is the last thing they want. Recessions are welcomed. It's the 'cold douche', a ruthless flush, so beloved by Schumpeter and the robber barons of American capitalism.
Len Hart is a Houston based film/video producer specializing in shorts and full-length documentaries. He is a former major market and network correspondent; credits include CBS, ABC-TV and UPI. He maintains the progressive blog: The Existentialist Cowboy
